China PSF, PFY producers cutting op rates on weak margins

04 April 2005 02:54  [Source: ICIS news]

SINGAPORE (CNI)--Mounting margin pressure has forced China’s polyester staple fibre (PSF) and polyester filament yarn (PFY) producers to cut operating rates to prevent a fall in prices, industry sources told CNI.

 

Several PSF and PFY producers reduced their production rates to around 60% in early March from their original 80-90%. Some have been operating at 50-55% since January and intend to keep the rates at this level until mid-April, when demand is expected to pick up. Any increase to around 80% would only happen if demand improved sufficiently, they said.

 

If fibre and yarn prices fell much below the psychological barrier of Rmb12,000/tonne ($1,450/Euro1,125) CFR China, producers would consider shutting down their plants, they added.

 

PSF prices are currently at Rmb12,000/tonne ex-works, Rmb2,200/tonne higher than prices a year earlier. Prices of partially oriented yarn (POY) are Rmb12,300/tonne ex-works, up Rmb2,000/tonne from the same time last year.

 

Prices of drawn textured yarn (DTY) are Rmb2,000-2,100/tonne higher at Rmb12,900-13,000/tonne ex-works. All the prices are for commodity-grade fibre and yarn.

 

Most PSF and PFY producers in China said they were sustaining losses as feedstock costs were too high and demand was too low. Margins varied from Rmb500-800/tonne to negative margins, depending on conversion and other costs.

 

Purified terephthalic acid (PTA) costs for imported material have surged to $870/tonne CFR China from $715/tonne CFR China a year earlier, according to ICIS-LOR* price reports. The cost of imported monoethylene glycol (MEG) has risen to $930/tonne CFR China from $805/tonne CFR China in the same period.

Producers said that  PTA costs in the domestic market were at Rmb8,000/tonne ex-works, while MEG was at Rmb11,000/tonne ex-works.

*ICIS-LOR is part of the same publishing group as CNI.

By: Prema Viswanathan
+65 6780 4359

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