Polyester: diversified PET bottle chip and fiber sectors

Among the polyester products, the three main products are filament, staple fiber and bottle chips. The demand for PFY and PSF shows some convergence due to their overlap in the textile and apparel sectors, while PET bottle chips represent a relatively independent market.

Since the Spring Festival, the polyester polymerization rate has not been low compared to the same period of last year, especially in the fiber sector, where the operating rate of direct-spun PFY and PSF plants is significantly higher than those of the same time in 2024. However, for PET bottle chips, due to a significant number of new plants coming online in 2024 and poor operating rate after the holiday, the operating rate has remained low, about 10 percentage points lower than the same period of last year.

Starting this week, several PET bottle chip factories are scheduled to restart, including Yisheng Hainan and Wankai over the weekend, as well as Yisheng Dalian and Sanfame this week and next week, and Sinopec Yizheng and Haoyuan in April. If these facilities manage to restart smoothly, the operating rate of PET bottle chip plants is expected to exceed the same period of last year, reaching over 90% capacity. After entering a period of high operating rate in April, the follow-up demand for PET bottle chips may not be as strong, leading to potential inventory accumulation and compression of processing spread in the market.

In the fiber sector, despite high operating rate, the operating rate of downstream segments like DTY plants, spinners, fabric mills and printing and dyeing mills has been weak, resulting into demand lagging behind last year's performance. After the Spring Festival, the inventory of PFY and PSF factories have shown some oscillation, with filament inventory remaining stable while staple fiber inventory has seen a slight increase due to relatively low absolute prices prompting some downstream stockpiling. Compared to the weak operating rate of polyester yarn plants, DTY and fabric markets performed weaker.

Overall, the inventory of PFY and PSF factories is not low now, and the anticipated demand peak during the "golden March and silver April" for textiles and apparel has clearly fallen short. The market remains skeptical about the sustained high operating rate of PFY and PSF plants in the future. In the short term, the focus will be on whether the maintenance of Xingbang and the restarts of Jingwei and Senjo will be implemented.

The polyester market is anticipated to see a short-term increase in operating rate, but there remains uncertainty regarding when the downward feedback from the fiber end will extend to the operating rate of filament and staple fiber plants and how significant that impact will be. Thus, wait-and-see attitude will be remained in short run.