Asia polyester yarn, fibre prices to stay soft on weak demand

SINGAPORE (ICIS)–Spot prices of polyester filament yarn (PFY) and polyester staple fibre (PSF) in Asia are likely to remain weak on lacklustre demand, rising inventory of the products and falling feedstock costs, industry sources said on Thursday.

On 28 July, spot prices of drawn texturised yarn (DTY) 150D/48 filament (F) were assessed at $1.28-1.30/kg FOB (free on board) NE (northeast) Asia, down by $0.02-0.03/kg from the previous week, according to ICIS data.

Prices of the material in southeast Asia slipped by $0.01/kg at the high end of the price range to $1.30-1.32/kg FOB SE Asia. In India, spot prices fell to $1.29-1.30/kg FOB, down by $0.02/kg over the same period, the data showed.

Meanwhile, PSF 1.4 denier (D) prices were assessed stable at $1.02-1.04/kg FOB northeast Asia. In China, domestic prices of the material fell by yuan (CNY) 50/tonne at the high-end of the price range to CNY6,950-7,000/tonne ($1,119-1,127/tonne) DEL (delivered) east China, according to ICIS.

“Even though prices have slipped, there was no increase in demand at all,” a southeast Asia-based producer said.

He added that the presence of “lower-priced cargoes from other regions have made it very difficult for us to [make a sale]”.

Market sentiment was hit this week by the 8.5% plunge in China’s main Shanghai stock market index on Monday (27 July), following the release of downbeat economic data from the world’s second-biggest economy.

China is a key polyester market in Asia.

Buyers in the region became hesitant to procure PFY and PSF cargoes and were limiting their purchases to prompt requirements, market sources said.

Asian producers, on the other hand, are under pressure to sell cargoes amid growing inventory of various grades of polyesters caused by a prolonged slowdown in trade.

In China, PFY plants posted an average operating rate of 70% in the week ended 24 July, while the average sales-to-output ratio of producers stood at 70-100% during the period, according to ICIS data.

Domestic PSF plants, on the other hand, were running at a much-reduced average rate of 55%, as sales-to-output ratio of producers were pegged at 40- 90% in the same week.

In southeast Asia and India, polyester producers have also been running their plants at reduced capacity to stem the inventory build-up amid continued demand weakness, industry sources said.

Demand is unlikely to improve soon, said a trader based in southeast Asia.

Concerns over weak crude prices, the recent hefty losses in Asian stock markets and the general weakness of the global economy will continue to keep players in the polyester market cautious, industry sources said.

Falling costs of feedstocks purified terephthalic acid (PTA) and monoethylene glycol (MEG) were also pulling down the polyester yarn and fibre prices.

On 24 July, average spot PTA prices fell by $14.5/tonne week on week to $637-645/tonne CFR (cost and freight) CMP (China Main Port), while MEG prices shed $18/tonne to $836-848/tonne CFR CMP, according to ICIS data.

Focus article by Eric Su

($1 = CNY6.21)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections