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Low stocks of polyester products to support polymerization rate

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 Short-term expectation on polyester market
2 major external factors in the second half of year: The influence of geopolitical factor between US and Iran to crude oil price and the depressing impact of deteriorated Sino-US trade relationship to global consumption. Short-term focus is two meetings: 

The OPEC meeting in early-Jul
If the US-Iran factor weakens, price of crude oil is likely to consolidate in the second half of 2019 in expectation of weaker global economy and not growing supply (OPEC prolongs production cut but does not increase output reduction, and US raises output).

G20 Summit in end-Jun
Global trade relationship has deteriorated in the first half of 2019, not only the relationship between US and China, which may exert negative influence on global consumption, and the consumption of textiles is supposed to be affected too.

Stocks of major polyester products 
Currently, stocks of POY, FDY, DTY and PSF has declined by around 7-12 days compared with the high level in late-May. Some plants have even sold out. Overall stocks of PFY and PSF have been slanting low.

End-users expect demand to improve in Jul-Aug, but the increment may be slight. PFY plants is supported by low inventory of finished goods and moderate cash flow. The traditional turnaround of PET bottle chip is anticipated to be postponed with moderate orders. Therefore, the polymerization rate is expected to have support in Jun-Aug. Some PET bottle chip plants may have maintenance in Aug, while the PFY market is supposed to form a positive support to PTA and MEG market in Jul.

Short-term anticipation of PFY price and sales 
With low stocks of finished goods, price of PFY is likely to be easy to rise but hard to reduce in short run. However, as for the medium-to-long run, some new PFY plants are scheduled to start operation in Jul. The demand of end-users should be concerned. If demand improves apparently and the run rate of end-users rises, consumption of PFY is supposed to grow, which will be supportive to PFY price. On the contrary, if sales of grey fabric remain slack and stocks accumulate, downstream plants are expected to focus on lowering earlier feedstock prepared. Under such circumstance, stocks of PFY are anticipated to ascend, which will weigh on price. Feedstock prepared in downstream plants is mainly above 20 days now, and sales of PFY may be muted in short term.


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