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Insight | Time:Jan 11 2018 2:05PM
Virgin PSF surges to previous high of Nov
 
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Virgin PSF began a new year with a bullish trend. Amid sustained firming crude oil and polyester feedstock, most plants has increased their prices to over 9,000yuan/mt, a level approaching that in early-mid Nov. 


In mid-November, virgin PSF average price hit yearly ceiling of 9,205yuan/mt with Zhejiang Yuandong even quoting as high as around 9,500yuan/mt. The average price now is at 9,100yuan/mt with the weekly guidance price of Sinopec standing at 9,550yuan/mt. The incentives behind these two hikes are the increase of crude oil and polyester feedstock.

Virgin PSF operating rate in these two periods stands high at around 90%, yet inventory in November was obviously lower than current level. Part of reason is that some plants will cut or stop production in end-Jan and early Feb due to Lunar New year holiday and thus intend to build up inventory to cover the replenishment demand of downstream plants after the holiday. Also, as spinners now mainly have a stock of feedstock of around 15-20days, they will have to restock in late Feb.


In terms of downstream market, compared with 13,850yuan/mt in mid-Nov, polyester yarn 32S price is now 200yuan/mt lower at 13,650yuan/mt. And cash flow is also 100yuan/mt lower than the level in that period, yet on the whole shows positive.


Spinners’ inventory of feedstock as well as finished products also trended likewise in these two periods, with the former at around 15-20days and the latter within 5 days.


Thus given the good fundamentals of virgin PSF and polyester yarn, if crude oil and polyester feedstock keeps hiking, virgin PSF may still hike and demand for replenishment before the Lunar New Year will also be spurred up.
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