Stocks of polyester fabric are mounting in Chinese mills. As per a CCF Group report, the operating rate of downstream fabric mills in Haining, Changshu, Xiaoshan and Shaoxing is falling, disfavoring a rigid demand for polyester fiber. Falling feedstock prices have discouraged sales of polyester fiber too. Downstream buyers would rather cut the run rate than hoard stocks. The processing fee of the whole industrial chain is shrinking. Players' mindset will not recover until feedstock prices stabilize. Even if buy-the-dip appears, it is simply a transfer of polyester inventory. Polyester companies are still expected to face a big pressure to cut production during the Lunar Chinese New Year holiday.
The rapid ups and downs of raw materials have disrupted market sentiments. Fabric traders and end-users who make finished goods were hurt the most with volatile raw material prices. Prices of raw materials surged when the regulation of energy consumption was strict in late September and October, while buyers needed to prepare feedstock for the coming online shopping spree in November. As a result, many downstream players placed orders and even hoarded up a large quantity of fabrics. However, feedstock prices dropped rapidly later. Most fabric traders, especially those who purchased for speculation, faced serious losses. Some even canceled their orders with fabric mills.