PFY Price will Drop Again

    Since this week, the domestic PFY price rebounded and gave the market the new hope. Is this a temporary rebound or a real one? I prefer the former view. 

    This rebound was because the market was repairing the big drop of PFY price in early days. The average PFY drop price was higher than 1000 Yuan/Ton or even above in early days, which appears as waterfall approach, and the market has not adapted this situation, so it rebounded technically.

    And, the PFY price which dropped dramatically approached the cost line and attracted the market again. If calculated PTA and MEG price as 8000 Yuan/Ton, the polyester chips raw materials price will be 9600 Yuan/Ton, so the break-even price will be at least 10,000 Yuan/Ton, however, the low-end transaction price appeared 9,600 Yuan/Ton, which caused the purchase intention of part of factories increased. After the price of POY products reduced, its price also closed to cost line, take 150D/48F for example, its practical price of part of factories down to 10,700-10,800 Yuan/Ton, and this cost price promoted the production and sales, forming the low price stage covering and helping the market to rebound.

    Further more, the polyester factories began to limit production for protecting price. A set of 200,000 tons polyester equipment of a direct spinning factory in Wujiang city of Jiangsu province began to stop and overhaul for 20 days since 30^th, Oct, and its main products were semi-dull POY and FDY; A set of 120,000 tons polyester equipment of a direct spinning factory in Ningbo city of Zhejiang province began to stop and overhaul for 15 days since the end of October, and its main product was semi-dull POY; Another set of 400,000 tons polyester equipment in Xiaoshan in Zhejiang province prepared to stop and overhaul since the late November; Several other sets of polyester equipments prepared to stop and overhaul in Ningbo and a set of 200,000 tons polyester equipment planed to stop recently in Shaoxing. Stopping production in a short term eased the contradiction of PFY supply and demand effectively, and positively stabilized the price.    

    In general, the current market was still weak, and will not support the sustainable rebound of PFY price. Especially, by now, the operating rate in Shengze of Jiangsu province dropped to 70%, and its nearby areas, for example, Meiyan dropped to 50% and Hengshan dropped to 40%, and the operating rate of other important weaving areas also dropped to 50%. It is obvious that this low weaving operating rate is difficult to support the current PFY price. Further more, the current macro economic situation, capital aspect, and the approach of Spring Festival, all go against the current market, so it is estimated that PFY price will still suffer “cold air” attack.