PSF and polyester yarn market situation after China’s National Day

During the National Day holiday, oil prices surged, driving up direct-spun PSF offers by 100-150yuan/mt generally. On the first day returning from the holiday, offers continued to rise by 50-100yuan/mt. Compared to the level before the holiday, the price increased by 150-200yuan/mt, lower than the price increase of PFY of 500-600yuan/mt.

In terms of sales, PFY sales were also smooth compared to PSF. Currently, PFY inventory has been lower than PSF, and inventory reduced smoothly.

With higher PSF prices, polyester yarn prices also followed up after the holiday. Vortex-spun polyester yarn prices rose by 100-200yuan/mt, and ring-spun polyester yarn prices rose by 200-300yuan/mt. Polyester/cotton yarn prices moved up by 200-400yuan/mt. Therefore, compared to the period before the holiday, the cash flow of polyester yarn and polyester/cotton yarn improved somewhat.

But with higher yarn prices, spinners reflect that sales are average. Transactions are not optimistic after prices increase, as downstream market takes time to digest the price increase.

Therefore, from the current perspective, it does not seem optimistic whether the cost side of PSF can provide sufficient time for downstream to pass on the price increase, especially given the rapid decline in oil prices. Additionally, there is still a certain level of inventory for PSF, and with the operating rate continuing to rise after the holiday, they are currently at a high level of around 84%, which is unfavorable for inventory reduction. This has also led to the relatively weaker fundamentals of PSF compared to PFY, and is the main reason for the recent compression in processing spread.