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Insight | Time: Aug 22 2022 3:41PM  Editor:Tina Kong
Polyester industrial yarn price slumps after failed to break predicament
 
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PIY market was greatly volatile in recent two months. Big PIY companies intensively raised yarn price to avert losses in late-Jun. The trading price of ordinary high-tenacity 1000D surged to 12,150yuan/mt from 10,500yuan/mt. However, trading failed to grow after price hiked. Therefore, PIY companies tried to curb price from reducing by scaling down output. Trading under low price successively emerged after shivering for around one month. The trading price of ordinary high-tenacity 1000D has been at 9,500-9,700yuan/mt now, near the cost line, but did not show signals to stop falling. Therefore, PIY producers could be described as failing to break the predicament.

 

image.pngThis failure was attributed to objective factors and subjective factors. In terms of objective factors, price of bright polyester fiber chip kept falling when PIY plants were firm in preventing price from diving. As downstream plants were under losses based on spot PIY price, some chose to consume PIY prepared before or scaled down production. Trading of PIY was lackluster. With inventory burden, price of PIY collapsed. If upstream feedstock price is rising and downstream speculative demand is moderate, PIY plants may be successful in curbing price from falling and turning to be profitable. As for the subjective factors, different companies saw various operation status. After curbing price from declining for around one month but with high stocks, some enterprises cut price for promotion, which dragged down the market price. However, the subjective factors were also impacted by the objective issue. Some PIY plants were forced to cut price for promotion with collapsing feedstock cost but high PIY price. Actually, the root was because the profit was hard to be high amid excessive capacity.

 

With volatile prices, PIY producers and downstream companies were both hurt, and the impact on PIY plants was bigger. Downstream factories were forced to cut production or suspend production under losses. As for PIY manufactures, the influence covered many aspects: the first was the loss of production due to the production curtailment. The second was falling orders amid high price and the high profit was not practical. Although price has slumped recently, most downstream buyers still purchased PIY only to cover the pressing demand. The third was the devaluation of PIY produced earlier under high feedstock price. PIY prices have fallen to near the cost line and have not stopped reducing. In addition, some PIY producers ramped up run rate recently. Therefore, PIY market is expected to see competition among low prices again later.

[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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