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Insight | Time:May 17 2018 1:08PM
PFY: supply growth starts accelerating
 
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New supply of PFY is not ample since the beginning of the year. Some plants intended to start operation after the Lunar New Year holiday, but was delayed. Only new unit in Tongkun and Xinfengmin started production as scheduled. Tongkun Hengbang’s 300kta, Jiaxing Petrochemical’s 300kta and Xinfengmin Zhongshi’s 2nd phase with 30kta capacity successively started operation in end-Feb and Mar, but the production remained low in Mar-Apr affected by device debugging and winding end problem.

The three new units mentioned above are expected to add production after May, and other new plants are anticipated to start production successively too. Around 2,510kt of new capacity is expected to start operation from the second half of May to September. Although it will take time to see rising production after these new plants gradually starting operation, supply of PFY is anticipated to grow faster on intensive capacity growth.


In view of the product structure in new plants, most new device that started operation this year focused on FDY production, including Tongkun and Jiaxing Petrochemical’s 300kta and Xinfengmin Zhongshi’s 300kta. The new units that will start production later will focus on POY production.

Supply of polyester filament yarn increased limitedly this year (although 900kta of new plants started production, output failed to grow on equipment debugging and winding-end problem), and downstream weavers witnessed tolerable business. Twisting, warp knitting and two-for-one twisting equipment increased considerably around the second quarter. Supply of PFY kept sound. Under such circumstance, PFY inventory slipped in advance after the Lunar New Year holiday and price of PFY remained firm, keeping rising stably since mid-Mar with high profit. 

Such situation may alter in the next months. With faster increasing supply and falling buying interest of downstream buyers (downstream plants purchased continuously from mid-Mar to mid-Apr but were cautious in procuring from late-Apr on high yarn price and the lack of confidence on market trend), inventory of PFY may accumulate in the future. However, price of PFY may be largely stable in short run with support from feedstock market, but discounts may appear in some plants, and price of some goods with tight supply may move up slightly. Inventory in polyester plants is low, and grey fabric stocks are low too in weavers, while run rate is high. Thus, the accumulation of inventory also needs time. Price of PFY is anticipated to be weak, hard to slip greatly, if crude oil and polyester feedstock market does not see declining tendency in Jun.
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