PFY and PSF stock level is yet to face peak pressure and profit on the paper is still tolerable

For fiber products, virgin PSF and PFY market newly increased at least 500kt demand from recycled fiber market. Besides, PFY downstream twisting capacity expanded too fast in past two years, twisters mainly focused on exploiting market in 2019, , which has always guaranteed the purchase volume of raw material POY. That also explains why melt-spun PFY O/R stands constantly high this year, and is still around 90% up to date. Downstream twisting plants are easily driven by the market news, and procurement soon follow up, even though such atmosphere is gradually weakening, this phenomenon has lasted for nearly a whole year. PSF O/R too, basically maintains at 85-90%.

Comprehensively speaking, PET bottle chip plants have begun to utilize output cut to slow its price fall via output cut, but PFY and PSF stock level is yet to face peak pressure and profit on the paper is still tolerable, hence even FDY is in continuous loss, plants could tolerate it. Therefore, the chance is small to see output cutback in polyester plants within short, the timing for cutback shall be put off. This also lays foundation for feedstock market to keep range bound.