Cost Push Becoming the Major Agent on Polyester Market

Since last week, transactions on polyester markets have increased obviously. With the support of firm feedstock cost and low prices of polyester products, downstream demand has been provoked somehow as well. Meanwhile, the sales of polyester filament has also warmed up from previous sluggish performance and PFY inventory decreased correspondently.

Major producers settled December PTA and MEG contracts last Friday at 9600yuan/mt and 8500yuan/mt, respectively, a relatively high cost for downstream polyester products. On the other hand, PTA futures market witnessed large increase for several days last week, which stimulated the PTA spot prices up further. Although central bank raised the one-year lending and deposit interest rate by 25 basis points on weekend, PTA futures market still kept the bullish trend on Monday. With the firm support from feedstock market, polyester filament yarn prices continued to move up today amidst cautiously optimistic sentiment.　

With the firm or rising feedstock prices, the prediction that polyester products may drop further gradually faded out, which also provokes downstream demand and PFY plants gained a chance to reduce inventory. For polyester plants, to maintain balanced or higher sales ratio and cut inventory before Lunar New Year may be their crucial desire under proper profits.

Recently, demand-driven type in polyester products, in particular, PFY in H1, gradually turned into Cost-push type. Aside from a few rigid demand, polyester products’ improvement mostly depended on polyester price hikes, which showed more influences in PET chip and PFY market. In the future, polyester products’ price may be affected by polyester feedstock, which was different from demand-driven market in March-Nov.　

The future supply of polyester raw materials may remain tight and the cost prices of polyester products will keep relatively high. Polyester plants may still focus on reducing inventory and pursuing a decent sales ratio under normal cash flow. Besides, if raw materials present firm or head up further will drag polyester product prices up. Therefore, we hold a cautious but positive opinion towards recent polyester market and look forward for a better scene after Lunar New Year. But concerning there is still more than a month to welcome Chinese Lunar New Year, uncertainties still exist during the period.