One may be a temporary supply-demand reversal

Last year, under inventory pressure in the fourth quarter, polyester units had a significant reduction in O/R, with the spinning sector falling particularly sharp. PFY O/R dropped to 50% or even slightly below, but fiber chip O/R did not see an equivalent decline.

This situation is the opposite this year, as the pandemic recedes, spinning factories are showing a high degree of initiative, and fiber chip production has been somewhat compressed. Although a number of new PFY units were put into production in the first half of the year, the output of PET fiber chip (before new PFY plants begin to produce PFY, the line will first produce PET fiber chip) did not accumulate significantly, as spinning lines are quickly integrated.

In other words, from a supply perspective, PET fiber chip did not increase output in sync with other links, but output of some unit did shrink to some extent. There were also some fiber chip units that were temporarily shut down for other reasons, contributing to factors.

However, from a demand perspective, since March and April of this year, downstream chip spun operating rate (as well as other fiber chip demand links) has seen a noticeable rebound, which means that fiber chip demand is also increasing. This alternation of supply and demand has led to a gradual tightening of PET fiber chip supply. In fact, it is not just virgin PET fiber chips, the recycling market has long been complaining of a shortage of raw materials.