Recycled PSF prices unlikely to drop further

Recently, the sluggish market has started to show some positive signs. Some factories have reported that "sales have improved a bit, and inventory has slightly decreased." Other factories have mentioned that "raw material prices may have stabilized, and we're waiting for virgin polyester to drive the market." Some traders have noted that the market is starting to pick up a bit. Although overall sales are still average, compared to the previous period of continuous weakness and decline, the current market shows more trading activity and confidence. Currently, demand is a bit weak, but prices are unlikely to drop further.

1. Supply of low-priced sources is not large due to high raw material costs previously

Currently, cold-washed flakes offers in Jiangsu and Zhejiang are mainly at 5,500-5,600yuan/mt, and the offers are at 5,400-5,500yuan/mt in Shandong and Guangdong, pre-tax delivered. The supply of low-priced sources is not large. Previously, prices in Anhui and Yangzhou reached as high as 5,700-5,800yuan/mt, and hot washed blue and white flakes are currently at 6,100-6,200yuan/mt, far exceeding last year's high levels, which supports the prices of recycled fibers.

2. Partial Chinese sales have started

Recently, the sales of recycled PSF in Hebei have been fairly good. In Shandong, HC re-PSF plant sales improve slightly, and sales ratio can reach around 80%. Sales in Nantong also turn better slightly. Compared to the weak market from mid-July to early Aug, there has been an upturn since mid-Aug. The back-to-school season has brought a wave of sales, and the traditional peak seasons of "Golden September and Silver October," as well as e-commerce's "Double Eleven" festival promotions, are approaching, which will likely improve demand. However, the situation is different for black solid re-PSF; with the gradual restart of factories in Jiangyin, prices may potentially decline.

Additionally, it is worth noting that the trading model of traders has changed in recent years. With the continuous expansion of HC virgin PSF capacity, the competition has become intense. There is competition not only among HC virgin PSF and HC re-PSF but also between established and new factories, as well as between state-owned and private enterprises. During off-seasons with high inventory or tight funds, HC virgin PSF plants are often sold in large quantities. Unlike recycled fibers, which are smaller in volume, can sometimes accept deposits or credit, and have more flexible negotiations, HC virgin PSF plants usually require full payment in cash. For example, some factories' low-price promotional thresholds are 1000 to 3000 tons. At a unit price of 8,000yuan/mt, this translates to a total payment of 8 to 24 million yuan. Even if several traders pool their resources, it tests their financial strength and market timing.

In summary, with raw material support and positive expectations for demand, the price of recycled PSF is unlikely to drop, and the market is waiting for external factors to drive it further.