Brief analysis on recent surge of direct-spun PSF market

After fluctuating for over one month, direct-spun PSF market embraces a wave of surge. The market is caught unprepared by the sudden event of crude oil side. On Sunday, some direct-spun PSF plants which had been short of supply and taken pre-sale orders stopped selling, some holding stockpiles sold actively and some with low inventory raised offers moderately. The market saw various mindset. Later on Monday, with the opening of futures market, polyester feedstock soared, especially MEG futures hit limit up. Direct-spun PSF plants also raised offers by 100-300yuan/mt in succession. However, the sales ratio was not as hot as expected. It mostly ranged in 200-300% with some higher at 400%. On Tuesday, polyester feedstock remained rising. MEG futures climbed up 6-8% and PTA up 2-3%. Direct-spun PSF plants raised offers by 150yuan/mt further supported by low inventory and high cost, and semi-dull 1.4D was traded higher at 7,600-7,800yuan/mt. As it is sudden, market players hold cautious attitude to the continuity of this round of rise. Therefore, traders mostly put a priority on selling instead of stocking up, while spinners restock moderately and take the opportunity to destock.

Price of direct-spun PSF spiked 400yuan/mt in just three days. Looking downstream, offers of polyester yarn also followed up by 300yuan/mt and polyester/cotton yarn partly up 100-200yuan/mt with some stable for sales. It compressed the profits of polyester yarn to some extent.

At present, polyester yarn market is struggling for sales at the cost of lowering price. The peak season which was thought to be bearish is cheered up by the sudden news and the sales see improvement periodically. However, it does not have substantial promotion to end-user demand. In particular, some spinners in Shandong and Hebei intend to cut and suspend production due to high cost and later military review on National Day.

After rising to over 7,600yuan/mt, direct-spun PSF is hard to find buying interest downstream and it will face the strong upstream yet weak downstream. If polyester feedstock continues to ascend, direct-spun PSF plants will follow the uptrend. But considering downstream digestion, the increase of offers is suggested to slow down.