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Insight | Time: Aug 18 2020 11:01AM
Polyester market witnesses improving performance and stabilizing mindset in Aug
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Market atmosphere on polyester market has improved in Aug compared with Jul, exerting active influence on the whole industry.

Recovery from low price was a major reason for this wave of uptrend.

PFY, which suffered huge losses before, increased the most among polyester products. That meant lower price was relatively safer. Improvement of PSF was limited, and PET bottle chip market remained in doldrums.

Operating rate of twisting units and fabric mills gradually ascended since late-Jul. Meanwhile, stocks of grey fabric descended with better orders. However, diversified performances were seen in various regions. Orders for knitted fabric were relatively better, especially warp knitting fabric in Haining. Water-jet fabric mills in Shengze witnessed weak appearance, and some plants were still bothered by high stocks. Overall run rate of downstream market was rising now.

Price of polyester products ended falling and rebounded in H2 Jul, which was cooperated by the demand side. Thus, polyester market seems to have a solid foundation in Aug.

PFY companies are anticipated to present strong mindset in short run. Although sales of PFY decline periodically, some PFY enterprises still adjust up price with better mindset. As for PSF market, low stocks maintain, with firm market fundamental. PET bottle chip market is relatively weaker in terms of price and price spread. From this perspective, polyester polymerization rate is expected to remain firm. Polyester run rate may rise if those polyester units under turnaround restart operation,, but is likely to reduce if PET bottle chip plants and PET fiber chip companies cut production under pressure.

Stocks of polyester products drop recently but are at yearly medium level. The so-called peak-season demand is not incarnated fully. Whether demand will continue rising or not in later period remains uncertain.

Cautiously speaking, among this wave of positive feedback, demand improvement of PFY market may be related with low price. The durability is expected to be limited if current performance driven by low price and seasonal demand is short-term. There is no sufficient momentum for long-term increase. PFY price may be in fluctuation in short term.

Demand has huge uncertainty this year. For example, stocks of EIA crude oil keep decreasing but output of crude oil in US fails to increase and price of crude oil is in stagnation. Although many participants expect firm crude oil price, most dare not hold too strong bullish view.

Positive attitude is held toward polyester market and downstream demand before mid-Sep. If crude oil market or demand side perform better than anticipated, current sound performance may last longer. Otherwise, the pressure on polyester polymerization rate should be taken into account.
[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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