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Insight | Time:Aug 11 2017 3:21PM
The reasons for brisk PFY sales recently
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After more than 20 days of lull, PFY sales warmed up since Wednesday. Then what is the reason for the brisk sales?

1. Lower PFY prices
PFY prices increased slowly in mid May-mid Jul and stabilized for a while then declined rapidly since the end of July. Comparing to the high levels in early July, POY prices have dropped by 500-700yuan/mt and FDY down by 700-1100yuan/mt. During PFY downtrend, the cost side kept firm so PFY profits were squeezed by about 500-1000yuan/mt. Some coarse PFY products were in small losses so the downside potential was limited.

yuan/mt FDY150/96 FDY61/24 POY150/48 POY75/72
Jul peak price 9105 10795 8495 9455
present price 8400 9735 7990 8730
change -705 -1060 -505 -725
  FDY150/96 FDY61/24 POY150/48 POY75/72
Jul peak profit 874.8 1882.9 555.6 1102.9
present profit 27.1 812.1 17.1 357.1
change -847.7 -1070.8 -538.5 -745.8

2. Firm costs
Unlike soft PFY market, PTA and MEG both presented quite firm since the latter half of July. MEG prompt supply presented tight and PTA inventory may dip further in Aug so PTA and MEG prices may keep firm, which provided confidence to market players.

3. Rigid demand
In the middle of July, PFY inventory in downstream plants was widely at 10-20 days with a few up to 30-60 days. Then PFY sales have kept low for a long time and downstream plants consumed PFY stocks to low levels. Some plants still have PFY stocks of about one-month volume but a few only have 3-5 days of PFY stocks. Therefore, downstream plants need to replenish PFY stocks.

4. Discounts
Big-volume deals usually enjoyed better prices.
yuan/mt FDY75/36 FDY150/96 POY75/72 POY150/288
Mainstream trading price 9500-9800 8350-8450 8700-8800 8100-8200
Bulk trading price 9400-9450 8250-8300 8600 7900-8000

However, the good sales may not last long. Due to the environmental inspection, the end-user operating rates may drop and PFY demand may turn insufficient. Downstream plants take time to digest previous procurement. So PFY sales may soften and PFY plants may lower offers to stimulate sales.
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