the pressure of capital, including losses and fund recouping

Secondly, the pressure of capital, including losses and fund recouping. Polyester yarn has suffered losses for over a month. Recent rise of raw materials has expanded its losses, and the spinners have to destock by underselling. Hard capital recouping exists all around. In past years, 70-80% of the fund could be recouped by Dragon Boat Festival, but this year, it was only 40-50%, and some even lower at 20%. Thus, the spinners are heavily burdened.

Currently most polyester yarn mills are indifferent to the rise and fall of upstream raw materials. They may buy in some when the price moves up, but they will keep inventory of raw material low. In particular, the price of raw materials are so high at over 9,000yuan/mt and their losses will reach 400yuan/mt if buying spot raw materials for immediate production, so they are likely to procure more cautiously. The market may improve slightly, but more production cut will be seen in Jun-Jul under high inventory and great losses. As a result, overall operating rate including that of polyester/cotton yarn will decline.