Price increment of POY and FDY was bigger than that of PSF in Mar, and price of FDY and PSF both headed south in late-Mar, while the decrement of PSF was larger. As for twisting sector and polyester spun yarn, price met resistance to rise. Price of polyester spun yarn increased only after PSF turned to decline. As for fabric manufacturing section, price increment of grey fabric was limited, and price of some varieties with plain sales even headed south, particularly water-jet lining.
Cash flow of end-users chased up slowly, especially downstream descriptions of PFY. Cash flow in most sparse twisting units was in negative territory since Mar, with the cash flow for mainstream descriptions at around –(200-300yuan/mt). Cash flow of grey fabric also turned to negative territory from late-Mar, and that of polyester spun yarn was relatively higher.
Operating rate of twisting units and fabric manufacturing plants remained high now as most plants were above cost line based on feedstock purchased before and not big inventory burden. Feedstock prepared before was ample.
The feedstock inventory of polyester yarn plants, twisting plants and fabric manufacturing units was slanting high since end-Mar based on historic data, especially twisting plants and fabric manufacturing units who had high stocks since the Spring Festival holiday.
Finished goods inventory
In view of the stocks of polyester yarn and grey fabric, end-users did not witness big inventory burden now. After experiencing destock in 2016-2018, although sales of fabric manufacturing plants were modest, the stocks were slanting low.
In short run, the ample feedstock prepared previously and not high inventory burden is the major reason supporting the high run rate of end-users, and the pressure is mainly from the meager cash flow and underperformed orders.
After the low-priced feedstock purchased being used up, downstream players have to cut run rate or hoard up stocks, while some plants may face deficit pressure even restocked. If there is no stimulus from upstream market and external environment like Mar, downstream plants may become more cautious in purchasing feedstock. As for polyester sector, PFY and PSF plants need to consider controlling the inventory accumulation issue. Currently, the cash flow of POY and PSF plants is moderate, and to guarantee sales ratio or the cash flow is an important issue that needed to be weighed.
Seen from the development of PFY and downstream market in recent years, the convergence of PFY market heightens, and the competition of downstream market is more severe after rapid expansion in 2017-2018. Relatively, PFY market possess relatively higher initiative compared with downstream sector.