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Insight | Time: Jun 22 2020 10:53AM
Opinions toward recent polyester and downstream market
 
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1. Orders may improve limitedly on the month in short term. Jun-Aug are traditional slack season in textile industry. Taking the water-jet silk-like fabric as an example, sales have started weakening entering Jun. Many overseas nations have relaxed lockdown in Apr-May, the later orders may rise limitedly after the orders which were suspended before finished delivery in Jun, which depends on the sample-making status in Jun-Jul.

2. Operating rate of downstream companies has reduced from high level, which may be a tendency in short run. Firstly, the temperature in Jul-Aug will be high in Jul-Aug, and the water-jet companies which take a lion share may suspend production. By convention, water-jet plants in Wujiang and Changxing will halt production for holiday under high temperature and during slack season. Secondly, if orders lack durability and even face downside risk, downstream enterprises may have to cut run rate during off-season, coupled with high inventory burden.

3. Downstream players turned to be cautious in operation. Downstream players were in panic near the Tomb-sweeping Festival (Apr 4-6), unwilling to purchase PET fiber chip even under 4,300yuan/mt. Orders failed to improve in late-Apr but players successively began having bottom-fishing in expectation of eased lockdown abroad. Downstream players gradually witnessed weakly improved orders from late-May and started purchasing feedstock. Falling crude oil broke buyers’ procurement tempo, and many turned to be cautious in restocking. Sales of PFY have been dull for 1 week. Downstream companies may be inactive in purchasing in short run and may procure attracted by low absolute price.

4. The polyester polymerization rate increased to 91.7% during Jun 8-12 but reduced to 90.7% on Jun 15-19 after Jiabao’s 400kt/year unit and Xinfengming’s 250kt/year unit shut down temporarily, but may gradually recover later and shiver around 91%, with the highest estimated at around 92%. Jun is still expected to be the best time for polyester market this year, with the highest run rate but the lowest stocks. However, the stocks of polyester market may accumulate in Jul, and the polyester polymerization rate may sustain temporarily. If demand is worse than anticipated in Aug-Oct and stocks accumulate, the polymerization rate may face downside risk.

[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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