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Insight | Time: Jun 19 2019 9:53AM
Stimulated by bullish news, polyester filament yarn price rises stably
 
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The news that the President Xi Jinping had a phone conversation with United States President Donald Trump on Tuesday alleviated the pessimism on the market after the tariff raised. Global financial market moved up. International crude oil futures surged, and downstream chemical products was also pushed up. Affected by this news, price of polyester filament yarn increased, and plants presented better mindset.

Actually, besides this bullish news, according to the research on polyester and downstream market yesterday, it was learned that the pessimism of market players has obviously eased compared with before. Future demand is expected to improve. Coupled with the stimulus from macro market, overall market is anticipated to have upward momentum in medium-to-long run.

From the aspect of PTA fundamental, the polymerization rate increases in Jun, and earlier anticipation of rising stocks gradually transits to balanced status. PTA units are scheduled to have maintenance in Jul, so overall market may be dominated by destocking, with moderate supply/demand pattern.

From the angle of polyester sector, polyester filament yarn plants witness low stocks and better cash flow, enjoying certain initiative now, and some try to sustain market atmosphere by stably and slightly raising price, which is likely to be helpful for improving profit and favorable for sales and downstream industry.

In regard with the downstream business, price of PFY stabilizes and slightly rebounds. Some fabric manufacturing plants and twisting units see slightly better sales. But most big enterprises do not witness improving business temporarily, requiring further observation. Inventory burden of some conventional goods remains high.

Currently, most downstream players worry about the market in the second half of year and demand for textile and industry in the future. Poor demand may be a long-term phenomenon, while periodical improvement may appear in Jul-Aug based on the following 2 points. 1. The export orders in the second half of year may emerge after the raise of tariff for goods valued $300 billion becoming clear. If the tariff is not raised or delayed, it is bullish and some export orders are likely to be placed. If the tariff is raised immediately, the impact is anticipated to be big. Demand from US may shrink, and some low-end orders to US will be snatched by the Southeast Asian countries, while the transmission is supposed to be small when China remains the biggest chemical fiber textile nation and the capacity in Southeast Asia is not big enough. Most orders are still expected to be placed to China, but buyers and sellers should negotiate tariff apportion well at first. 2. Even though domestic demand is soft, improvement is supposed to appear periodically in the second half of year. By convention, the improvement will emerge in Jul-Aug. However, the increment is not supposed to be very big as the grand environment is not good. Fabric manufacturers are cautious in purchasing, and the finished goods in fabric manufacturers is high, requiring time to digest. You can trace the downstream market situation from the
Operation report of fabric mills in Zhejiang and Jiangsu


Feedstock prepared of downstream plants can guarantee production till end-Jun or early-Jul, so procurement is likely to appear in end-Jun theoretically. Besides, downstream players’ purchasing mindset has altered compared with May, firmly holding bearish view in May but tangled about feedstock procurement now. If such mindset sustains, good sales are likely to appear on PFY market in later period, especially cooperated with bullish factors.
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