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Insight | Time: Feb 19 2021 10:03AM
Polyester market embraces a good start after holiday
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Some polyester companies restarted work after holiday on Feb 18. Price of polyester fibers largely climbed up on the first day of trading after the Spring Festival holiday, with increment of POY, FDY, DTY, PSF, water bottle chip and PET fiber chip at 300yuan/mt, 300yuan/mt, 200yuan/mt, 330yuan/mt, 275yuan/mt and 265yuan/mt respectively. However, cash flow of polyester products did not enlarge, basically flatting with pre-holiday level, as this round of increase was mainly propelled by upstream feedstock market.

Currently, the recovery of downstream plants is expected to be smooth, better than the estimate made before the Spring Festival holiday. Some downstream companies restarted production rapidly as some non-local workers decided to stay put for holiday. In addition, the COVID-19 is controlled well during the Lunar Chinese New Year, so the return of non-local workers to their job will be faster. Workers from low-risk areas do not need to have COVID-19 nucleic acid testing. Thus, downstream market may see faster post-holiday recovery this year. Polyester companies do not witness big inventory burden. Although the stocks of PFY are high in downstream participants, downstream buyers are still willing to purchase amid rising price. Sales of PFY and PSF remained sound on the first day of trading after holiday even though price largely increased by 300yuan/mt. Sales ratio of polyester fibers deserves anticipation in short run.

Polyester fiber companies enjoy discursive power to market quotations when the inventory burden is not high, feedstock cost is buoyant, downstream recovery is smooth and downstream capacity is expected to increase in the first half of 2021. Actually, price of polyester products tends to rise in short run as polyester companies are eager to raise price. Supported by cost, prices of polyester fibers are anticipated to return to the level before the pandemic. Price of PSF has hit the pre-pandemic level now.

Upward polyester fiber prices after holiday can be described as mainly stimulated by upstream cost, while later movement should pay attention to the resumption of downstream orders. In terms of macro environment, participants expect traditional demand for textiles and apparels to recover in 2021. However, as for the micro sector, some downstream companies saw modest orders based on the survey CCFGroup made before the Spring Festival holiday. On one hand, they dare not take orders, worrying feedstock price to increase after holiday. On the other hand, orders were not as good as expected. Therefore, overall demand is estimated to improve throughout 2021, but short-term recovery may meet obstacles, which should be concerned closely.
[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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