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Insight | Time: Jul 1 2020 3:37PM
What about recycled plants turning from solid re-PSF to HC re-PSF?
 
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Affected by weak demand, many solid re-PSF plants in Hebei and North Jiangsu have shut down recently. Especially in Hebei, the downstream yarn market is particularly sluggish. Close virgin PSF is sold with competitive prices and only one large plant maintains the operation, while other solid re-PSF plants run for a period and then shut down. In Sichuan, only three plants run operation continuously, while other plants restart operation late this year, and show difficulties in continuous operation.

Under this circumstance, some solid re-PSF plants in Jiangsu and Sichuan intend to turn to produce HC re-PSF, and a few production lines have been in trial, and products are expected to come out next month.

On the surface, the prices of HC re-PSF is more than 700-1,000yuan/mt higher than that of close virgin PSF, and the profit continues to be higher than that of close virgin PSF.



However, HC re-PSF market also sees the situation of solid re-PSF:
1. The oversupplied situation of HC re-PSF Capacity has just begun to be eliminated gradually after the solid waste ban.

2. The rapid capacity expansion of HC virgin PSF Zhejiang Quandi started trial operation of HC virgin PSF unit last week with production of 120mt per day. In the third quarter of 2020, Yizheng, Huaxing and Zhuocheng will start the new capacity, and in the fourth quarter, Hengyi will also start the new production.

3. Lower price spread between HC virgin PSF and HC re-PSF Currently, HC virgin PSF and HC re-PSF prices basically have no difference. Siliconized HC virgin PSF was lowly offered at 6,400-6,600yuan/mt, highly at 6,900-7,000yuan/mt, and siliconized HC re-PSF was lowly at 6,000-6,300yuan/mt, highly at 6,900yuan/mt.

For the operation of HC re-PSF plants:
1. Low operating rate

Operating rate of HC re-PSF plants is far lower than that in the first half year of 2019.

2. Withdrawing from the market + relocation
Under the background of refining and chemical integration, the polyester industry chain has large new capacities, and the COVID-19 pandemic and the low oil price accelerates the reshuffle of recycled market. In Shandong, a few HC re-PSF plants have not restarted operation this year, and some plants in Guangdong intend to withdraw from the market. In addition, some plants in Hangzhou suspend operation for long period due to relocation. The specific capacity and production will be launched in the outlook report for the second quarter.

3. Purchase and sales operations
Currently, with the higher temperature, consumption of drinks increases, and plants face less difficulties in purchasing feedstock. But previously, the supply of feedstock is very limited, and prices are close to that of PET fiber chip.
In addition, sales are ordinary overall, except some plants to sell with lower prices. Moreover, with the pressure from low HC virgin PSF prices, HC re-PSF sales meet difficulties.

In general, the theoretical value of HC re-PSF is slightly better than solid re-PSF, but there are still many obstacles. Especially in the actual operation, there are barriers to the process, sales and procurement.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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