High Stocks, Low Orders Keep Chinese Polyester Downstream Market Weak

High Stocks, Low Orders Keep Chinese Polyester Downstream Market Weak

In China, by January 17, polyester plants had planned to cut production by around 9.14 million tons in January, and around 1.98 million tons in February.

Thus, the aggregated capacity involved was nearly 15.53 million tons/year in Dec-Feb, sharing 26.6% of the total. The turnaround is intensive in January, and the lowest polyester polymerization rate near the Spring Festival holiday is expected to appear in late-January. In addition, as for the forecast for the polyester production and the feedstock stocks in Q1 2020, the polyester production is not supposed to be low, which may grow by above 10% compared with 2019. Based on the current feedstock units, the stocks accumulation of PTA in Q1 2020 is supposed to be bigger than 2019, and that of MEG is expected to be smaller than 2019, but the specific change will be consistent with the feedstock units change in later period. The stocks of POY, FDY and DTY 10 days before the 2020 Spring Festival were medium-to-high, which were seven days, 9.1 days and 15.7 days respectively now.

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Polyester downstream market
As for the holiday schedule of downstream market, some plants put the holiday ahead of schedule, but the overall run rate of downstream market changed little compared with last year. 30% of downstream plants put holiday schedule for the Spring Festival near 15 days before the Spring Festival. In view of the capital recouping of downstream market, the recouping was slightly slower & weaker than the last year. Some downstream plants reflected that only 40-50% of payment was collected by now, which was mainly because end-users saw unsmooth sales and mounting stocks.

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The feedstock prepared in downstream fabric mills was mainly near 15 days when the absolute price had risk after price rose before holiday, post-holiday orders lacked clear direction and upstream feedstock market lacked apparently upward momentum after holiday. Coupled with tight capital, the pre-holiday

replenishment was not huge this year. Besides, different regions witnessed various performances. The feedstock inventory in Cixi was relatively huge, while that in Changxing was smaller.?

From the angle of production recovery after holidays, the schedule is basically similar to last year according to the reflection of factories, mainly after the Lantern Festival (Feb 8).?Some plants will resume production after Feb 22 (the end of the first month after the Spring Festival) with high stocks of finished goods, slow recouping of capital and unclear post-holiday orders.

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Currently, polyester downstream market is relatively weaker compared with polyester market when stocks of finished goods are high and orders are worse than last year, and the feedstock tendency after holiday and order change of downstream market will affect the real restarting time of downstream plants and their feedstock procurement after holiday.


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