Polyester yarn destocked prominently with speculative demand shown

Recently, the market is covered will dull sentiment across the board. However, polyester yarn market presents outstanding performance. It was warmed up as PSF rebounded from falling and with speculative demand seen, it was destocked sharply.

PSF and polyester yarn have experience two months’decline during Oct to Dec

Downstream buyers now keep purchasing with cautious attitude. Traders, including export traders have demand for restocking after two months’consumption of stocks, and they are only waiting for a proper opportunity. This situation does not change.

In mid-Dec, PSF and polyester yarn stopped falling and stabilized

As crude oil strengthened and PTA run rate declined, they showed uptrend, and then speculative demand appeared. At first, export orders were placed intensively. Most spinners with export business in Fujian, Jiangsu and Zhejiang received orders to be scheduled until Jan and some to Feb. In Hubei, polyester sewing thread also seemed moderate. Secondly, some downstream weavers and traders started pre-holiday restocking, despite at a small volume. In Foshan, Shaoxing and Quanzhou, much more orders were placed compared with early Dec. It is noteworthy that due to severe pandemic in Shaoxing, the logistics was hindered and a lot of physical stocks had to be left in the spinners, influencing later order-placing.

It is clear that export orders will not sustain and the destocking of polyester yarn will depend on domestic demand. However, downstream weavers now run at very low rate, indicating bearish downstream demand. At present, other yarns are all experiencing inventory accumulation, showing weakness of overall market conditions which also shadows the direction of polyester yarn.

However, there is no doubt that the trend of raw materials still plays a significant role

Cotton price will fall back later as downstream uses non-cotton fibers increasingly which is also the reason why cotton-contained yarns are sold stagnantly. VSF remains dipping and rayon yarn also meets tough sales. Direct-spun PSF price has great influences on the sales of polyester yarn, but after this round of destocking, polyester yarn will be less sensitive to it. As a result, downstream weavers may change their mind and accept polyester yarn above 11,500yuan/mt.