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Insight | Time: Nov 19 2019 3:52PM
Polyester yarn market encountering winter in advance
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As raw materials for cotton textile, cotton, VSF and PSF all face huge pressure in 2019. The sentiment of these three markets cools down obviously and the finished products are also affected negatively. Comparatively, polyester yarn is sold better among them. However, due to continuous fall of polyester feedstock, PSF price stays in downtrend and polyester yarn is also dragged down. From the chart below, it can be seen that polyester yarn price moved into the doldrums in line with raw materials. It has hit the lowest since 2017. Most spinners start to sell at around cost line, but even so, the sales cannot move smoothly. Some spinners suffered huge losses as they stocked up PSF during the decline of PSF or accumulated finished products, and some can run normally only by production cut and cautious operation.

The sustained depression of PSF makes a dent in the vitality of the market and the wait-and-see attitude adopted by downstream also hamper the sales of polyester yarn. In a long period time, small and medium-sized spinners were forced to cut production and operating rate in Zhejiang, Jiangsu and Hebei declined. In the meantime, end-user fabric plants ran at low rate. Looking from the chart below, the operating rate of polyester yarn mills in Jul-Sept was much lower than that in the same period of last year. Generally, spinners are not active in production cut considering production cost and labor sustainability, but this year, a large amount of small and medium-sized plants reduce production and some small plants even suspend production, which also indicates the sluggish market at present.

From the perspective of overall trend this year, lacking obvious improvement of polyester feedstock and rebound of end-user demand results in current depression of polyester yarn market which is also reflected in the slackness in peak season. As Spring Festival will come earlier this year, most spinners are expected to take holidays much earlier. With so many unfavorable factors, the market will be difficult to improve. If end-user demand does not recover obviously, this situation may sustain until next year and overall operation environment will continue to be burdened.
[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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