HC virgin PSF market performs well in 2024

Due to the improved market situation in the second half of the year, the performance of HC virgin PSF market has been relatively good this year, overall better than last year and also better than HC re-PSF market.

HC virgin PSF production continues to increase. In the past two years, the growth rate of HC virgin PSF production has remained at 13%-14%. Although customers expect overall demand to be increasing this year, the overall supply has also reached a new high, resulting in more intense market competition compared to last year.

In terms of plant operation, operating rate of HC virgin PSF is better than last year. It is expected that the operating rate in December may remain at a high level, with the overall rate for the year likely reaching around 60%. In particular, HC virgin PSF prices rebounded after decline in the second quarter, and the operating rate was better than the same period of last year. In the third quarter, there was a significant drop in price; in mid-August, a sharp decline in PX triggered PTA and PSF futures to fall to new lows, and after the collapse of crude oil prices in September, the polymerization cost dropped to a new low since 2022. On September 11, the polymerization cost fell to 5,423yuan/mt, while the price for hot washed blue and white bottle flakes was at 5,850 yuan/mt. The processing spread for HC virgin PSF was goof, and the low-priced HC virgin PSF was similar to the prices of HC re-PSF. Additionally, with the restart of previously shut-down factories, the operating rate of HC virgin PSF has quickly increased since September.

In terms of profitability, the cash flow of HC virgin PSF this year has also performed well, reaching a peak of 844yuan/mt. This year, it only fell below the cost line around May to June due to weak demand in April to May, leading to poor sales and a continuous decline in prices. In mid-June, some factories offered large promotions, and traders stocked up in the range of 7,650-7,750yuan/mt.

Since the continuous capacity expansion of HC virgin PSF, market pricing has become more flexible, with large producers quickly following suit and smaller factories often jumping the gun. This year, the overall processing spread is decent, and its price is close to that of HC re-PSF, even currently being lower than HC re-PSF partly. The cost-effectiveness of HC virgin PSF is becoming more apparent, allowing it to encroach on the market share of recycled products. Some factories received a lot of low-priced orders earlier, with a few even able to see orders last until early December. HC re-PSF is facing poor sales, leading to inventory accumulation, and factories in South China have started to halt production successively.

Currently, the processing spread for HC virgin PSF remains at 1,634yuan/mt, with overall market demand being average, and there is a possibility that prices may continue to decline. HC re-PSF is being squeezed from feedstock and HC virgin PSF markets, leading to inventory accumulation in factories, with actual orders under pressure for negotiation. Factories have a generally pessimistic outlook for the future market, and some plan to shut down earlier for Spring Festival holiday.