Polyester downstream market to see production suspension tide from Christmas

Price of polyester feedstock surged in Dec, especially MEG, greatly pushing up the cost for polyester goods, and many polyester products have become not profitable. Most polyester plants chose to raise price passively to pass on the cost, and only few companies like Shaoxing Tiansheng chose to cut run rate and scale down production in advance. With the approaching of year end, speculative procurement of downstream buyers was limited, and some purchased when price was low, while looking-on mindset sustained. However, rising price can only stimulate the rigid demand. Current PFY price may be hard to decline but easy to increase in short run, so downstream plants are anticipated to purchase to cover the pressing demand before the Lunar New Year holiday, which renders intensive procurement to appear sometimes in Dec. Recently, MEG price kept hiking, so downstream buying interest was relatively stronger.

Downstream fabric mills that had orders at hand were hurry to finish the orders before the Spring Festival, and some other plants also increased purchasing when feedstock price was rising. Overall trading atmosphere slightly warmed up. In addition, the bullish news of the first-stage Sino-US trade agreement also boosted market players’ confidence. However, the effect on the chemical fiber downstream customers’ mindset and orders was limited, while the influence on cotton downstream customers and orders was bigger. Generally, rising feedstock price pushed up fabric manufacturing market and curbed the run rate of downstream plants from falling. The operating rate of fabric mills in Zhejiang and Jiangsu has remained at 62% for three weeks.