test

Member ID:
Password:
Stay logged in for 30 days
Pls change your password according to new rules.
close

login CCFGroup App

Insight | Time: Nov 16 2021 11:14AM  Editor:CCFGroup
How does polyester value chain perform amid alleviated Dual Control?
 
Text size

With increasing supply of coal in China, the influence of electricity consumption regulation started fading in Nov. Polyester market shifted into consolidation period. How about the effect of this round of electricity consumption control? What will players concern on polyester market? The following part will have a brief analysis on recent market concerns:

 

1. Does polyester market improve after many regions cancelled the control of electricity consumption? Does it perform as anticipated?

The production tempo of the whole polyester value chain was affected by the regulation of energy consumption since Sep, especially downstream DTY, fabric manufacturing and printing and dyeing sectors, which weighed on demand for polyester.


Units that were forced to cut production earlier could gradually restart operation after the control being cancelled, which was expected to boost demand theoretically. However, market players were cautious impacted by volatile energy and raw material cost. The production has not resumed completely in enterprises and the trading atmosphere cooled down. There was a gap with expectation.


 2. What was the main impact of earlier power restriction on the polyester market? How about the operating rate of downstream plants? Does the operating rate of polyester plants and downstream factories change after the regulation of energy consumption being canceled.

Affected by the regulation of energy consumption, the operating rate of plants on the whole polyester industrial chain descended, especially the run rate of downstream plants.

 

There were some characteristics based on the specific performance:


Dispersed among regions: the control policy of electricity consumption differed among different regions in terms of the time and durability.

 

Frequent fluctuation: the operating rate was volatile as the consumption of electricity was adjusted flexibly.


Great up and down: the regulation was strict when the supply of electricity was tight, once ending up with plunging operating rate.


According to the survey made by CCFGroup, the control of energy consumption was the strictest in late-Sep when the operating rate of DTY plants, fabric mills and printing and dyeing plants once dropped to 40%, 37% and 20% respectively, which was at 87%, 67% and 67% respectively in early-Sep. After the restriction being canceled, the operating rate of DTY plants, fabric mills and printing and dyeing plants rose to 79%, 82% and 87% respectively on Nov 4 but slightly declined recently as some regions still restricted the consumption of electricity.

 

 The polyester polymerization rate once slipped to around 81% in end-Sep affected by the regulation of energy consumption, hitting yearly low, and ascended to near 85% in early-Nov.

 3. Why did downstream and polyester market perform so badly? Which part went wrong?

As for polyester sector, PSF and PFY market encountered pressure as downstream plants scaled down more production than polyester plants due to the control of energy consumption. As a result, polyester plants failed to see apparently falling stocks. Recently, as downstream buyers became cautious in purchasing with falling commodity prices, PFY and PSF plants saw higher inventory burden.


From the angle of demand, downstream buyers were cautious in purchasing when the prices of energy and raw materials were volatile and they expected prices to fall later. End-users saw rapidly falling orders after prices plunged since late-Oct, which dragged down the mindset among DTY plants and fabric mills.  


Actually, falling demand maybe an important reason. The operating rate of the whole industrial chain was high in the first half of 2021, resulting into surging production, but demand lacked strong upward momentum in the second half of year. Global economy hit peak, the recovery of economy outside China slowed down and problems like sea freight and inflation remained, which exerted negative effect on demand.

 4. How about the downstream orders now and the orders in Q4 after winter orders for the online shopping spree ended?

Downstream orders were weak in early-Nov and strong looking-on mindset was seen.

As for domestic sales, with falling prices, orders were meager. Fabric mills, printing and dyeing plants and fabric traders focused on delivering orders taken before. In terms of export orders for grey fabric, sidelined attitude was held with falling feedstock prices, high sea freight and the exchange rate issue.

 

 In general, export and domestic sales may be basically in stagnation before feedstock price stabilized. Enterprises are waiting for the digestion of price risk. After seasonal orders almost came to an end, market players turned attention to whether feedstock price will gradually stabilize and if there are new orders in end-2021.

 

 5. What's the major contradiction and key focus on polyester industrial chain now?

Volatile energy prices in recent 2 months directly led to the change of cost and guided the price of polyester products. Enterprises became more cautious amid bearish energy and commodity prices since late-Oct. The commodity price tendency will remain market concern later, which will have apparent effect on the release tempo of demand.

 

From the angle of the industrial chain, market players gradually turned attention to the recovery of polyester and end-user demand with fading impact of the energy consumption regulation.


PFY plants saw apparent pressure now as downstream buyers were cautious in restocking. The release of demand may not emerge unless PFY plants cut price for promotion and feedstock cost stabilizes. As for PSF market, the pressure from supply and demand was not big. Players paid attention to whether demand will chase up after operating rate being ramped up. Stocks of PET bottle chip were not high supported by strong export demand and the delivery was tight, ending up with strong mindset on the market.

 

With recovering supply, market atmosphere on polyester value chain is likely to gradually restore if demand can improve. If downstream demand sustains mild after Dec, the whole value chain is expected to face pressure. Some enterprises may put their holiday for the Lunar Chinese New Year ahead of schedule. 

[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.
Related Articles
PET fiber chip market daily (Jul 4, 2022)
Sales of PFY diversified today
Sinopec Yizheng shifts back to produce PET bottle chip
China's polyester capacity adjustment Jul 2022
PET fiber chip market morning express (Jul 4, 2022)
China chemical fiber market weekly forecast (Jul 4, 2022)
Petrochemical market morning express (Jul 7, 2022)
China polyester market snapshot (Jul 4, 2022)
Sales of PFY present bleak last weekend
PET fiber chip market weekly (Jun 27-Jul 1, 2022)
 
Research
PET bottle chip industry development under the epidemic
China's MEG market outlook-H2 2022
PX price spikes - How does PX turn the tide
PTA struggle for direction under rising cost and weak demand
PSF industry development amid ups and downs
Polyester demand forecast in H2 2022
 
 

娴欏叕缃戝畨澶33010902000742鍙