Polyester industrial yarn market review in 2024: possible cyclical turning point

1. The price fluctuation further narrowed, and the annual average price continued to decline year-on-year

In 2024, the price of polyester industrial yarn mainly fluctuated along with the cost end, with some differentiation in stages. The price was characterized by interval fluctuation first, and then approximate "V" shape, with a small price fluctuation range. In the first half of 2024, price of polyester feedstock and PET fiber chip was in range bound. Price of PIY was also hemmed into a tight range. In the second half of 2024, price of polyester feedstock and PET fiber chip greatly fell and then retreated from high level. Price of conventional PIY was stable at first and then plunged and followed the uptrend on cost side but reduced again in line with the cost side later, mainly in range bound. Taking ordinary high-tenacity polyester industrial yarn 1000D/192 F as an example, according to the data from CCFGroup, the highest and lowest price was at 8900yuan/mt and 7750yuan/mt respectively in 2024, with gap at 1150yuan/mt, down by 200yuan/mt over 2023. The annual price of 2024 was at 8423yuan/mt, down by 403yuan/mt or 4.6% on the year.

2. The nominal capacity increased slightly, and the effective capacity saw negative growth.

In 2024, the new capacity of polyester industrial yarn was relatively small, only 40,000 tons of Jiangsu Junma, and 50,000 tons of Shanghai Wenlong's device was eliminated, resulting in a net decrease of 10,000 tons in the actual effective capacity of industrial yarn. By the end of 2023, the domestic polyester industrial yarn capacity was 3.29 million tons/year. Therefore, by the end of 2024, the effective capacity of domestic polyester industrial yarn was about 3.28 million tons/year, with a capacity reduction of 0.3%.

3. The output greatly increased

In 2024, although the new capacity of polyester industrial yarn industry was relatively small, even the effective capacity rose negatively, the output growth rate was relatively large. It was mainly because there were many new units put into production in 2023, and the output released by these units was more sufficient in 2024 than that in 2023. Therefore, the industrial output increased more in 2024. It is estimated that the total output will increase by about 12% year-on-year compared with 2023, with the year-on-year growth rate expanding and the capacity utilization rate also improving year-on-year.

4. The processing spread continued to decline year-on-year, and the specific trend bottomed out and picked up.

In 2024, the processing spread of conventional polyester industrial yarn products was suppressed first and then increased. Taking ordinary high-tenacity 1000D as an example, the average annual processing spread in 2024 was at 1,763yuan/mt, down 240yuan/mt compared with 2023, and the loss was further expanded. Under the situation of excess supply, the industry competition was fierce. In the first half of 2024, the processing spread was compressed to a historical low level, and the processing spread of ordinary high-tenacity 1000D was mostly around 1400-1600 yuan/mt, resulting in serious losses. In the second half of the year, to reduce losses, PIY companies made great efforts to expand the processing spread. From July to mid-August, the upstream cost dropped sharply, but the price of PIY was mainly stable, so the processing spread was greatly repaired, but the transactions were bleak. Affected by the pressure of high inventory, the price of PIY greatly fell from mid-August to mid-September, and the transaction volume increased under low price. The processing spread was compressed again. PIY producers failed to curb price from falling. In the fourth quarter, the upstream cost fell back, but the price of PIY was relatively firm under the price raising action of the factory again. Therefore, the processing spread gradually expanded to the high level of the year. The processing spread of ordinary high-tenacity PIY was up to 2,300 yuan/mt, which could already cover the workshop production cost. However, if accounting for finance and depreciation, it was still difficult to make profits. However, the price raising action of the factory in the fourth quarter was successful, because the price has been successfully conducted down. Downstream rigid demand was sound and there were periodical replenishments. PIY companies did not face big inventory burden now, which was also benefited from falling run rate.

5. Summary

To sum up, in 2024, the capacity of polyester industrial yarn decreased slightly but the output increased greatly. In terms of price, the price fluctuated around the cost side in the first half of the year and differentiated in the second half of the year. Therefore, the loss in the first half of the year was relatively serious, and the processing spread gradually repaired in the second half of the year. In 2025, it is expected that the new capacity of polyester industrial yarn industry will be less, while the demand is expected to be further improved. Therefore, it is expected that the supply-demand structure of polyester industrial yarn in 2025 will be improved compared with 2024, and the processing spread of the industry is expected to moderately advance. Then 2024 may be the cyclical inflection point of the industry. However, polyester industrial yarn industry is, after all, an industry with excess capacity. In 2024, the industry capacity utilization rate rebounded compared with the previous two years, but it was still in a low state in the earlier years. Therefore, if the operating rate of PIY plants significantly increases in 2025, the industry competition will remain fierce.