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Chinese polyester plants scale down

From April to May, many polyester plants in China scaled down or suspended production. Polyester feedstock price also weakened. The inventory burden has been obviously eased. Cash flow of PFY and PET bottle chips slightly improved, and PFY plants turned to be profitable but PSF plants still suffered losses with falling prices. The polymerization rate has increased to around 90.5 per cent from 87.8 per cent. In addition, some PFY and PSF plants have presold some orders. The polymerization rate is expected to be supportive to the upstream feedstock market in the short term.

Players lowered their run rate to slow down the accumulation speed. Orders improved sporadically after PFY price firmed up, but the overall weakness has not changed, supporting the run rate of twisting units and fabric manufacturing plants. The intensified Sino-US trade conflict has made downstream plants cautious in purchases and the situation is not expected to change in the short run.

Replenishing of downstream plants in June has improved compared with April or May. Polyester plants witnessed decreasing stocks. Actually, the inventory was transferred to the downstream market and partially to traders. Downstream demand has been continuously weak. Stocks of feedstock and finished goods are expected to be high in the short run.

 
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