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Insight | Time: Sep 22 2022 9:50AM  Editor:Tina Kong
China's PFY exports slump in August and may extend lower
 
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According to the data from China customs, PFY exports were at 255kt in Aug, down 12.2% on the month and up 23.1% on the year. In Jan-Aug, PFY export amounted to 2173.1kt, up 4.9% on annual basis. Export in Aug has been apparently lower than the average in Jan-Jul, but it still saw year-on-year increase as the export volume was very low at the same period of last year. PFY exports clearly tend to reduce.

 

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Decreasing PFY exports in Aug was mainly attributed to the following two reasons: firstly, the textile and apparel production countries were estimated to face inadequate orders when apparel wholesalers in US and Europe encountered big inventory burden, which resulted into falling demand for feedstock. Secondly, the US dollar was firm while other currencies depreciated. Some regions representative by Bangladesh, Egypt and Pakistan even witnessed short foreign exchange.


Exports of PFY by variety in Aug 2022 (Unit: tons)
Variety  Aug export volume MOM change YOY change YOY change of Jan-Aug
POY (54024600) 39669 -23.30% 93.00% -14.20%
DTY (54023310) 116665 -18.30% 26.60% 21.20%
FDY (54024700) 45763 0.00% 24.80% -6.10%
PIY (54022000) 44998 7.20% -10.20% -3.10%
Textured yarn (54023390) 6177 -4.40% 11.50% 20.10%
Other PFY (54025200) 1692 -2.90% -15.20% 9.00%

Among exported textile filament, export of POY remained sluggish in Aug, followed by DTY, while that of FDY was moderate, which was mainly due to regionally different demand. For example, Egypt mainly purchased POY and DTY and Pakistan mostly bought DTY. Weaker orders from these two nations would obviously impact POY and DTY export in China.


Top 10 export destinations of PFY in Aug 2022 (Unit: tons)
Destination Jul export Aug export MOM change YOY change Market share
Brazil 41060 31405 -23.50% 96.00% 12.30%
Vietnam 23757 25350 6.70% 58.60% 9.90%
Egypt 42793 24015 -43.90% 56.50% 9.40%
India 23857 20495 -14.10% 40.60% 8.00%
South Korea 17553 16761 -4.50% 13.80% 6.60%
Indonesia 12223 16190 32.50% 74.30% 6.40%
Turkey 13660 14515 6.30% 33.10% 5.70%
Bangladesh 10815 10395 -3.90% 18.80% 4.10%
Mexico 9971 10031 0.60% 65.00% 3.90%
Pakistan 16201 7646 -52.80% -60.20% 3.00%


Exports of PFY to Indonesia hit multi-year new high in Aug. Reflected by traders, local price of DTY was basically close to the domestic price in China, even lower in some plants. Therefore, Indonesia鈥檚 import demand for China-made POY was under apparent uptrend since May, while its demand for China-made DTY was modest. Such trend may continue in short run.

 

Brazil originally decided to launch anti-dumping in end-Aug but it decides to delay for one year. Previously, intensive orders were placed with the worry of anti-dumping, which pulled forward some potential demand. Exports of PFY to Brazil have dropped by more than 20% on the month in Aug and customers from Brazil focused on inquiring in Sep, without too many actual orders. Exports of PFY to Brazil may extend lower.

 

Both Pakistan and Bangladesh face severe shortages of foreign exchange reserves, and Bangladesh became the third South Asian country after Pakistan and Sri Lanka to seek loans from the International Monetary Fund (IMF) in Jul because of shrinking foreign exchange reserves and a soaring trade deficit. In addition, Pakistan suffered rare floods. Pakistan and Bangladesh may be hard to see apparent demand recovery in short run.

 

Egypt faces a severe debt crisis, with more than $5 billion and euro-denominated securities maturing in the fourth quarter and another $9 billion expiring in 2023, according to data compiled by Bloomberg. Under severe debt crisis, many enterprises are worried that buyers from Egypt will not be able to pay normally and are cautious about orders exported to Egypt.

 

PFY exports are expected to extend lower in Sep while the decrement may be not big after plunged in Aug. The PFY export is preliminarily estimated to be near 240kt in Aug and may amount to 3150kt throughout 2022. Exports in Nov and Dec will greatly affect the total export in 2022.

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Remark: the freight of different ships and forwarders differs, and the above freight is only for reference.


The freight from Ningbo port to Brazil/NAV fell to near US$5500/40HQ, still having downward space with big increment before, and that to Pakistan/Karachi was at US$1100/40HQ, which reduced slower and may not change much later. The freight from Xiamen to Vietnam/Ho Chi Minh was stabilized at US$50-70/40HQ, basically touching bottom.

 

The sea freight was under downward streak in Aug-Sep but the reduction of some routes has obviously slowed down from mid-Sep, with some even showing signals to touch bottom. Some shipping companies are heard to plan to cancel many sailings in Oct. Therefore, the freight is likely to see apparently slower reduction, while some routes may continue witnessing falling freight due to meager demand.

[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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