Asia polyester demand stays weak; producers saddled with high stocks

Author: Judith Wang

2019/11/15

SINGAPORE (ICIS)--Polyester demand in Asia is expected to continue slowing down as most downstream converters have wrapped up year-end orders and have low incentive to restock cargoes at this time.

The US-China trade war and global economic slowdown will also dampen buying to an extent, market sources said.

Spot partially oriented yarn (POY) 150 denier (D) prices in the week ended 12 November were assessed at $0.90-0.92/kg FOB (free on board) NE (northeast) Asia, down by $0.01/kg at the high end of the previous week’s price range.

For draw textured yarn (DTY) 150D, prices fell over the same period by $0.02/kg at the high end to $1.15-1.18/tonne FOB SE Asia and FOB India, respectively, according to ICIS.

Spot polyester prices have been falling since mid-September in view of declining feedstock cost and rising inventories.

Recent weakness in feedstock purified terephthalic acid (PTA) and monoethylene glycol (MEG) markets cast a shadow on polyester discussions.

“Year-end is usually off-peak season, so I don’t expect to see a rebound in polyester market,” a major regional producer said.

Major exporters had to cut prices to promote sales as downstream converters were not keen to replenish cargoes.

“Raw materials are falling, so we are under pressure to reduce polyester prices,” a major Chinese producer said.

In the meantime, polyester producers are facing rising inventories. Yarn producers are saddled with 11-25 days’ worth of inventories from 10-24 days’ worth one week ago, while fibre producers have 6-13 days’ worth of stocks from 7-12 days’ worth previously.

“Rising inventories speak volumes about slowing consumption,” the producer said.

Producers in India and southeast Asia were also running their polyester plants at reduced rates amid poor demand.

“Our sales are very slow. Buyers are not rushing to place orders,” an Indian producer said.

Focus article by Judith Wang