Polyester market witnessed firm upstream section but weaker downstream demand in Nov.

Polyester feedstock cost ascended with rising crude oil
Price of crude oil increased, benefited from optimism around coronavirus vaccine since early-Nov. Nov settlement price of crude oil rose by 25.48% and the closing price on Nov 26 hit the highest since on Mar 5.

Polyester polymerization rate sustained around 90-92% with rising crude oil price, supportive to PTA and MEG market. Therefore, price of spot and futures PTA and MEG all moved up.

For polyester companies, the feedstock cost increased by 8.15% from 3,818yuan/mt to 4,129yuan/mt.


Seasonal demand of grey fabric market diminished
By now, the operating rate of fabric mills in Zhejiang and Jiangsu declined by around 8% to 85% since early-Nov, with decrement of circular knitting plants in Xiaoshan and Shaoxing, warp knitting plants in Changshu and water-jet units in Siyang at 27%, 10% and 7% respectively.

Entering Dec, more downstream companies are expected to suspend production. With the coming of Lunar New Year holiday, some non-local workers will return home in advance. Seasonal demand from downstream market more tends to diminish.


Therefore, downstream buyers presented higher buying interest with rising upstream market and stocks of PFY accumulated limitedly. Seasonal rigid demand has weakened. Due to the mismatch of upstream and downstream market, cash flow of polyester fibers (medium link) was squeezed. Except for PSF, POY, FDY and PET fiber chip companies have all suffered losses.

Polyester enterprises did not see big inventory burden now but the pressure of cash flow was prominent. Whether cost side will surrender some cash flow to polyester fiber market and the turnaround plan of some polyester units should be noted in Dec.