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Insight | Time:Jan 6 2017 1:44PM
Will spinners restock for PSF before the Lunar New Year
 
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In end-December, many downstream spinning mills, mainly those with low feedstock inventory, restock for PSF propelled by rebounding polyester feedstock. And at present, PSF inventory of spinners could only ensure production till the Lunar New Year (Jan 27, 2017) while feedstock preparation for after-holiday production has not emerged yet. Then will the restock appear before the New Year?

PSF fluctuated up this year and sustained at a high level in recent days. Downstream spinners and
traders intended to replenish yet showed cautious due to the high price. Direct-spun PSF plants, however, were reluctant to lower price backed by low inventory and polyester feedstock cost. Thus trading came to a deadlock.



Besides, expectation for the market after the Spring Festival (Jan 27-Feb 3, 2017) is also a great concern.

Though currently PSF plants have low product inventory or even show short of supply, many plants will operate as usual during the New Year holidays, raising concerns that increasing inventory of these plants after the holidays may exert downward pressure on the market.

Plant production halt or cut-down plan during the Spring Festival
Yizheng Chemical Fiber Cut production by 20% on Jan 16 and resume after the Lantern festival
Huaxicun No production halt or cut-down
Jinxing No production halt or cut-down
Xianglu No production halt or cut-down
Jingwei Some production cut-down
Jinlun No production halt or cut-down
Wanjie No production halt or cut-down
Tianjin Petrochemical No production halt or cut-down
Luoyang Petrochemical, Luoyang shihua No production halt or cut-down
Kangxin Halt during Jan 18-Feb 12
Huaxing No production halt or cut-down
Yuanfang No production halt or cut-down

Other plants’ production halt or cut-down plan have not settled down yet.

Transportation service will stop before Jan 15 of 2017 and will not resume until the Lantern festival (Feb 11, 2017). Spinners thus are left around ten days to replenish the feedstock. On the other hand, as most of these mills will shut during Jan 17-25 of 2017 and will restart during Feb 4-11 with some later after the Lantern Festival, one-week or ten days replenishment for production after the Lunar New Year will be sufficient given their low product inventory and rigid demand for feedstock.

Given all these into consideration, another round of restock of downstream spinners may emerge next week, yet the trading is limited because of the uncertainty of market fundamentals after the Festival. At the same time, this forecast is made on a steady macro environment, another picture may appear should big market fluctuations happen.
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