Brief analysis of polyester filament production and demand in 2024

The net increase of polyester filament yarn capacity is less than 1 million tons in 2024 and the growth rate is estimated to 1.9%. Rongsheng Shengyuan's phase II new unit with 500kt/year of capacity has not started production, and it is anticipant to be put into production in end-December.

With scarce new capacity and optimistic view toward 2024 market, PFY companies continued running at high capacity. The production hiked especially in Q1 when few plants had turnaround during the Lunar New Year holiday. The growth rate of PFY production is expected to be around 8% throughout 2024.

Does the end-user demand support the high growth rate of PFY production?

As for exports of PFY, it amounted to 3173.3kt in January-October, down by 6.07% year on year, which was mainly dragged down by the implementation of BIS certification in India and the launch of new unit in Turkey. In long run, after downstream orders for finished goods are transferred, optimistic view remains toward the PFY exports.

In terms of exports of textiles and apparels, the destocking cycle has been emend outside China and the demand enjoys resilience in US. The export value of textiles and apparels grew by 1.5% year on year in January-October.

The export volume of textiles and apparels rose in China in 2024 while the price declined. The export value of textiles and apparels rose by 1.5% in January-October, 2024 and the increase of actual volume could be near 10%.

As for domestic demand, the consumers presented low confidence with downturn real estate and lower expectation of income. The growth rate of local retail sales of textiles and apparels apparently decreased, with the growth rate of retail sales of textiles and apparels only at 1.1% in January-November.

Looking at the inventory, the inventory of PFY and fabrics has been apparently higher than the same period of last year. Partial production of PFY might have been shifted into the inventory accumulation of various links.

In summary, the production growth rate of polyester filament yarn in 2024 is expected to be around 8%, while the actual growth rate of end-user demand is projected to be only about 5-6% (with exports estimated to grow by 10% in quantity and domestic demand by approximately 1-2%). The remaining production will be converted into inventory across various stages, including accumulation at synthetic fiber factories, fabric mills and fabric inventory in intermediate links.