Direct-spun PSF market: acceptable processing spread and inventory control

From late Oct to early Nov, the direct-spun PSF market experienced a rebound from its low point. During this round of rebound, PSF plants have adjusted their operational strategies: in the earlier phase of decline, plants accelerated the frequency of price reductions; recently, with futures rebounding, plants mainly focused on selling, showing less enthusiasm for raising prices.

This approach has directly resulted in a narrowing of the price gap between plants and traders, highlighting the plants' price advantage, while the operational space for traders has gradually diminished. Particularly in Nov, despite the rebound in futures, plant prices have remained relatively stable, leading to a weakening of market basis. In just half a month, the basis for direct-spun PSF has compressed from about PF12+300 to around PF12+150yuan/mt.

Since Nov, sales in plants have also improved, and inventories have gradually decreased, currently falling to levels below 15 days.

The reason why plants do not raise the prices is partly due to an unfavorable outlook for the market. It is already Nov, the traditional "peak season" has passed, and downstream orders are expected to gradually decline. Currently, operating rate of spinning mills still maintains, and there is pressing demand. However, if orders continue to decrease, spinners may reduce their operating rate, leading to expectations of inventory accumulation. Therefore, the main focus remains on sales to leave sufficient operational space for the future.

Secondly, the processing spread of direct-spun PSF is still acceptable, maintaining at 1,300 to 1,400yuan/mt. After the lessons learned from the devaluation in Sep, quick monetization has become the top priority.

Thirdly, the plants plans to increase the proportion of direct sales in 2025. Given the current acceptable processing spread, the feasibility of this operation increases. Additionally, looking ahead to the new capacity expansions set to come online in 2025, PTA still faces excess supply pressure, whereas there are fewer new plans for PSF in 2025, indicating a healthier supply-demand balance, which is likely to improve processing spread compared to 2024. Consequently, the operational space for the plants will grow, and its bargaining power will be strengthened.