Polyester: the last downstream pre-holiday replenishment in play
气流纺纱网2021-01-18 08:01:30CCFGroup

Polyester cost kept rising since Nov with hiking crude oil price. In addition, downstream plants witnessed moderate business and high run rate and were active in purchasing once feedstock price was firm. Many downstream buyers have built stocks to guarantee production before the Lunar Chinese New Year since last week and held diversified attitude toward the replenishment for the production after holiday. Some participants start restocking in expectation of rising price after holiday, while many show sidelined attitude, expecting price to fall before the Chinese New Year holiday. Oil price rose firmly this week, further pushing up price of polyester industrial chain. Some downstream buyers that present looking-on mindset are forced to restock. Therefore, sales are good even when polyester fiber plants raise price.

According to the statistics of CCFGroup, deducting the consumption volume before the Spring Festival holiday, the post-holiday feedstock inventory of downstream market is mixed, with some as high as 1-3 months and some lower at 15-20 days. Some enterprises even do not replenish for the production after holiday temporarily. It may be the last replenishment before the Lunar Chinese New Year now, for the production after holiday. If feedstock price keeps firm later, some downstream buyers are expected to restock in short run. If it continues, the last pre-holiday replenishment is likely to largely come to an end after next week.

As for the tendency of polyester run rate and downstream operating rate: firstly, the annual turnaround plan has successively started. Many plants release maintenance plan this week, including 400kt/year from Kaishi, 270kt/year from Yijin, 400kt/year from Jiabao, 450kt/year from Jiabao, 320+250kt/year from Xianglu and 50kt/year from Shihua. The polyester polymerization rate is estimated to approach around 88% by this weekend. But some plants will restart from turnaround later. Generally speaking, the polyester polymerization rate is supposed to be higher than past years during the Spring Festival holiday. Some PSF companies have confirmed to not cut production during the Lunar Chinese New Year (Feb 12), and some express that the curtailment scale will be smaller than past years.

Secondly, downstream plants have successively starting holiday from this week. Most warp knitting plants and dyeing units is expected to shut down for holiday by this weekend, and those in other regions are anticipated to accelerate production suspension next week. The reduction of downstream operating rate is expected to accelerate. Most downstream plants will suspend production for Spring Festival holiday this year, just like past years, and the post-holiday resumption time is estimated to be basically similar to that in past years. The progress of pandemic should be noted later as it will directly affect the restart of downstream market after holiday.

Thirdly, smaller production curtailment of polyester fiber plants is supposed to be bullish for upstream feedstock market. Some polyester enterprises replenish feedstock for later production, but it is bearish for downstream market. If post-holiday demand resumes worse than anticipated, polyester fiber plants are expected to witness apparently mounting inventory burden.