Recycled PFY Will Stay Depressed

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Recycled polyester filament yarn (re-PFY) price consolidated at a low level since entering 2016 with average trade prices sustaining around 6000 yuan/mt. A short period of push-up occurred in March but was soon pulled down to previous lows by weak demand and declining polyester market. Cash flow averaged to -290yuan/mt in January-May this year except for black re-PFY which was capable to hold break-even level and in some cases recorded slight gains too. Re-PFY industry is constrained by firm recycled bottle flakes and weak re-PFY prices.  Ideal profits earned during 2010-2011 yielded an average cash flow of around 1000 yuan/mt. After the sharp decline in 2012, cash flow wandered around break-even level during 2012-2014. Losses pinned in 2015 and have reached worrying levels in 2016.

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Downward operating rate

Operating rate of re-PFY industry basically went in line with profits, notably in Jan-May, 2016 when operating rate dropped to 30% amid the large-scale deficits.

Depressed outlook

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Re-PFY industry continues to be pessimistic under the pressure of slipping demand and competition from virgin PFY, alongwith inefficient supply of recycled bottle flakes which restrained competitiveness of re-PFY with conventional specification. 

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