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Insight | Time: Oct 8 2018 11:27AM
Operation of the polyester market during the National Day holiday
 
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Operation of the polyester market during the National Day holiday
After the Mid-Autumn Festival, downstream market continued suspending production due to losses. Before the National Day holiday, polyester filament yarn plants enlarged discounts, and some downstream plants that did not stop production during the National Day holiday replenished properly; thus, sales ratio of PFY increased apparently before the National Day holiday. After entering the National Day holiday, price of polyester products was stable and sales were slack on Oct 1-3, sales started improving from Oct 4, with sales ratio at around 200-300% in some plants, mainly above 100%, and sales ratio was mainly around 100% on Oct 6. On Oct 4-6, some PFY plants raised price by 50-100yuan/mt driven by rising sales ratio. The average sales ratio of PFY was largely assessed to 80% during Oct 1-6. The sales ratios of major plants were at 100%, 100%, 100%, 20%, 90%, 110%, 80%, 100%, 40%, 80%, 60%, 80%, 85%, 100%, 65%, 50%, 100%, 100%, 115%, 70%, 80%, 75%. POY performed well, and sales ratio in mainstream plants was around 90%, while FDY underperformed, with sales ratio mainly around 60-80% on Oct 1-6. Considering the production stop and curtailment, the average inventory of POY was basically flat with that before the National Day holiday on Oct 1-6, and the stocks of FDY slightly accumulated.

Downstream weaving and twisting plants successively resumed production after Oct 1-3, and the recovery of twisting plants was faster. By Oct 7, the operating rate of twisting units in Taicang, Changshu and Changxing increased to 70-80%, and the recovery of weaving plants was slower than that of twisting plants. Sales ratio of PFY improved in the later period of the National Day holiday after run rate of downstream market increased as most downstream plants did not hoard up feedstock before holiday. In addition, downstream weaving plants saw slightly better orders affected by stablizing PFY price and sales of grey fabric slightly increased in some regions.

Market outlook after the National Day
During the National Day holiday, sales ratio of PFY was sound mainly stimulated by procurement on demand, and downstream orders improved but the volume was limited. Most downstream weaving and twisting plants were around cost line or saw minor profit based on current PFY price. Cash flow of PFY was good according to current polyester feedstock price. Market players still held cautious mindset and speculative demand was not strong.

After the holiday, operating rate of downstream market recovered to normal status, and sales ratio of polyester products improved compared with pre-holiday level, so price of polyester products is likely to rise slightly. Polyester feedstock market and the orders of downstream market should be noted. Generally speaking, if feedstock and downstream market always perform mildly, downstream market is more likely to purchase to cover the pressing demand. It may be hard for polyester plants to reduce inventory in a short run after the National Day holiday, and the stocks are not expected to keep low as before.

With the recovery of polyester products' profit in Oct and rising sales ratio, units that suspended production before may choose to resume production successively, and plants that cut output may continue adopting looking-on mood. The overall run rate of polyester plants may gradually increase after the holiday.
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