Direct-spun PSF: struggling around cost line

Since early this year, cash flow of direct-spun PSF has been compressed. It kept over 400yuan/mt in most of the time before Jun, while with the new capacity put into operation, it mostly stayed lower than 400yuan/mt since Jun. What’s more, it even reached cost line recently.

As bonus from recycled industry gradually vanished and new capacity of direct-spun PSF came on stream quickly with bearish downstream demand, direct-spun PSF market environment turned poorer. In Sept which was traditional peak season, only smooth sales were seen, and as soon as National Day holiday passed, spinners started to lower prices for sales due to high inventory and cash flow of direct-spun PSF shrank quickly due to the rise of polyester feedstock.

At present, direct-spun PSF inventory in the plants was at normal or lower level, but amid soft downstream demand and weakening polyester feedstock, most plants put a priority on sales. After intensive replenishment completed, direct-spun PSF plants adopted different operation. Some large plants raised offers. No matter the price was low or high, downstream purchased scarcely amid current demand status, so they still increased offers or reduced discounts despite the rise of polyester feedstock. On the other hand, some plants cut production. Even though the inventory pressure was not high, the bearish demand resulted in accumulation of direct-spun PSF, so they cut production to reduce the risks of inventory depreciation.

Both raising prices and cutting production reflect that direct-spun PSF plants have started to take precautions or make efforts to improve current situation. At present, it needs to pay attention to the progress of China-US trade talk and the continuity of the impacts brought by Iran crude oil event. If the market can be cheered up by favorable news, silver Oct will be worthy of the wait. The sales may turn better and the price is likely to keep rangebound.