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Price of polyester products accelerates reducing, how will it move?

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 Hot polyester market in Jun has cooled down rapidly in Jul.

The primary performance is continuously slack sales of PFY since early-Jul, with sales ratio mainly lingering around 20-30% or even lower sometimes in the first half of Jul, and stocks of PFY have started mounting.

With firm feedstock market, some polyester plants choose to curtail production in order to slash run rate, and the polymerization rate has below 90% by Jul 15. Many players concern about the future downward space.

This round of O/R slash concentrates on big plants, so the scale is huge. But many plants do not have confirmed plan to curtail output temporarily. Some plants have scaled down production before, and some plants witnessed sound sales before, so the stocks are low. The overall cash flow of polyester plants is not very bad, more appropriately to be described as moderate.

How will polyester market fare in later period? The reaction of end-users is crucial. You can get more information about the downstream market from the 
Operation report of fabric mills in Zhejiang and Jiangsu 

It is learned that some end-users need to restock around mid-Jul, and whether it will be strong enough to push up overall market is the focus of polyester plants. Cutting price may be the best stimulus.

The market performance from late-May to Jun was a bottom-fishing lured by low price to a large extent as downstream players did not see better business during this period. By now, it is reflected that downstream market is still weak. Price of polyester products has increased a lot, so moderate price reduction may provide purchasing space for downstream buyers.

PFY plants have enlarged discounts today, with decrement for PFY mainly around 100-300yuan/mt and even higher around 400-500yuan/mt. Price decrease may drag down market atmosphere, but may be the forced method to break the deadlock. 

If price moves down and end-users restock, sales ratio of PFY is likely to improve in late-Jul, which may play an active role in stabilizing market mindset. But how much will price decline further and how long will it last still need further observation.

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