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Insight | Time:Jul 3 2018 1:32PM
Polyester industrial yarn market may be not sluggish in July
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Summer is a traditional slack season on polyester market, and polyester industrial yarn market is no exception. Demand for polyester industrial yarn for vehicles reduces with falling run rate of vehicles plants on higher temperature, and the progress on infrastructure also slows down with heater weather. Orders for PIY declined in Jun, and downstream demand was meager, but most PIY plants were lucrative and actual sales did not slip. As for market trend in Jul, price of PIY may not decline greatly and oversupply may not intensify during slack season, which is mainly attributed to the following reasons:

1. Crude oil market is strong, and cost is unlikely to plunge
Crude oil market performed strong in recent period and may consolidate strongly in short run although crude oil market is volatile affected by various factors. Demand for gasoline is sound in summer, which is supportive to crude oil market. Besides, regional tense also supports oil price.

2. Actual output of polyester industrial yarn may reduce greatly in Jul
Production of polyester industrial yarn was high in Jun, and output in some major large plants was apparently higher than earlier period, but supply of PIY is likely to decline substantially as some plants may scale down production in slack season and Guxiandao may suspend production temporarily. The production curtailment in some PIY plants is supposed to be not obvious, which may have influence on market. Guxiandao is expected to shut down for around one month on transformer expansion, and the specific time is not confirmed, very probably in Jul-Aug. Output in Guxiandao amounted to 36,000mt in May, and the overall capacity is at 600kt, sharing 30% of the national total. Hence, the temporary shutdown of it will exert great impact on PIY supply/demand pattern.

3. Downstream demand is not as feeble as imagined
Actual demand for PIY was not poor in Jun although sales ratio in some large plants failed to reach 100%. Production in large plants like Guxiandao and Hailide obviously accumulated, and sales were not worse than past months. Currently, not many downstream plants scale down production or suspend production although orders have decreased. Rigid demand for PIY is supposed to maintain, and periodical supply tightness of some PIY descriptions may appear once Guxiandao stops production temporarily and some other major plants cut run rate.

In summary, price of polyester industrial is unlikely to slip greatly in Jul and overall market may be not as sluggish as imagined. Supported by feedstock market and moderate supply/demand status, trading price of polyester industrial yarn is expected to be largely stable, and discounts may be available for some large orders.

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