Price of PFY kept falling after mid-Oct affected by collapsing cost and worse-than-anticipated demand, but PFY price stabilized after some PFY plants curbed price from dipping jointly around mid-Nov, and some downstream buyers restocked. However, with plunging feedstock cost, PFY price stepped into downtrend again. Polyester feedstock dipped by around 500yuan/mt during last week.
In addition, poor downstream demand and higher stocks of PFY also weighed on PFY price. Inventory of PFY has been slanting high after great increase in Sep. Most downstream buyers only purchased on a need-to-basis when PFY price headed south, and speculative replenishment was scarce. Some end-users chose to suspend or cut output to control the devaluation risk of stocks at hand amid rapidly slipping PFY price; thus, rigid demand dwindled. Currently, stocks of POY, FDY and DTY were around 18-19 days, 20-21 days, and 21-22 days respectively, slanting high. PFY plants were forced to accelerate cutting price to promote sales to lower the devaluation of inventory.
As for cost side, PX-PTA spread was moderate now, which had downward room. PTA price is expected to reduce further in short run. MEG port inventory is anticipated to continue accumulating, and the industrial fundamental remains weak. MEG price is still supposed to decline further. Therefore, polyester feedstock market is likely to keep bearish in later period.
If PFY price stabilizes, downstream plants may ramp up run rate but the increment may be limited with the approaching of Lunar New Year and in anticipation of feeble demand. If PFY price keeps dipping and the reduction accelerates, end-users may choose to shut down for holiday in advance to avoid the risk of inventory devaluation, to lower losses. Thus, PFY plants may face difficulty in reducing inventory in later period.
All in all, price of PFY is supposed to be easy to reduce but hard to rise in later period.