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Insight | Time: Sep 30 2020 3:03PM
Will better PFY and downstream market continue in Oct?
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Polyester and downstream markets showed signals to improve recently. Firstly, fabric market kept turning better since Aug, with rising orders, profit and run rate. Stocks of grey fabric and feedstock inventory of grey fabric plants gradually declined. Overall downstream market witnesses apparently eased pressure compared with the first half of year, especially in knitting and home textile sectors. Secondly, price of PFY moved up in end-Sep despite of falling feedstock price, and sales improved, resulting into decreasing stocks and recovering profit. Cash flow of PET fiber chip has turned to positive territory. Better PFY market was mainly stimulated by improving downstream fabric market and falling feedstock price. 

Downstream plants saw high stocks of finished goods and feedstock in the second quarter after restocked but inventory of finished goods and feedstock declined in Q3 with better seasonal demand and more cautious purchase of PFY as PFY price has uncertainty. Feedstock inventory of fabric mills continued dropping, down by around 1/3 now compared with the earlier high. Overall inventory burden has been eased on fabric market, but different manufacturing bases witnessed various appearances. Water-jet fabric mills still faced huge pressure, while knitting market including warp knitting fabric and circular knitting fabric has seen obviously mitigated pressure.

Improving orders on downstream market may continue into late-Oct, and orders afterward still needs further observation. PFY market is not likely to deteriorate further in Oct. If external environment does not become bearish, market sentiment on PFY market may even improve further in short run, with recovering profit and falling stocks. However, as for the forecast for the polyester polymerization rate, it is still expected to reduce in Q4, but the downward room may be limited in Oct, estimated at above 90%.
[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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