Several polyester plants have raised their polyester filament prices by 50-100 yuan/ton, and the upward trend in polyester filament prices continues.
Since 2021, affected by the economic downturn, polyester filament plants have actively controlled their inventory after the high inventory cycle ended. Following the National Day holiday this year, polyester filament inventories decreased again, reaching a low level in recent years. At the end of October, as temperatures dropped in many areas, demand for winter fabrics increased, driving textile factories and intermediate traders to reduce their inventories, leading to an overall increase in the operating rate of the chemical fiber weaving industry.
In early November, the polyester industry was filled with mixed news. The main raw material, PTA, is driving its own decoupling process, tariff risks are improving, and OPEC+ is suspending its production increase plan in the first quarter of next year. These positive factors combined to drive up both the volume and price of polyester filament. Overall, this upward trend driven by the decoupling effect largely follows the market demand brought about by the previous cooling trend, continuing to push polyester filament prices steadily upward. The current problem is that while prices are in place, can the market keep up?
This year's weaving market has seen significant differences in demand across different sub-sectors, directly impacting the purchasing power of polyester filament. The purchasing surge at the end of October was due to two main factors: firstly, poor market expectations during the off-season led manufacturers to hesitate to stock up, resulting in widespread production stoppages and a surge in demand that couldn't be met by existing inventory after temperatures dropped; secondly, polyester filament prices finally rebounded after a continuous decline in September, coupled with some downstream restocking demand – a confluence of favorable conditions. However, since November, with winter orders gradually being fulfilled and subsequent orders failing to keep pace, water-jet loom manufacturers have become less active in purchasing, leading to a decline in market demand for polyester filament, a key raw material for water-jet looms. According to data from Longzhong, the polyester filament industry's production-to-sales ratio was 30-50% in early November, with a slight increase in enterprise inventory.
Currently, after upstream production capacity was controlled, the cost of polyester raw materials such as PTA continued to rise, driving a steady increase in polyester filament prices. However, downstream demand has weakened after the order surge in October, as new orders have failed to materialize. For polyester plants, inventory pressure is relatively low. As of November 6th, POY plants had 11.6 days of inventory, FDY plants had 19.7 days, and DTY plants had 25.6 days, all at low levels. Furthermore, polyester plants experienced another round of destocking on November 7th, making overall inventory manageable. This means polyester companies do not need to resort to promotional tactics to reduce inventory. However, for weaving companies, market demand is currently insufficient. Without substantial demand, factories have virtually no bargaining power. The prices of grey fabric and finished fabric are unlikely to rise in line with raw material prices, meaning that every slight increase in upstream prices results in a decrease in downstream profits, posing a significant challenge for companies. However, the reality of rising costs is undeniable, and polyester factories are unlikely to sell filaments at a loss without the pressure of reducing inventory. The rise in polyester filament prices has become a trend, and whether weaving companies should buy filaments, and how much they should buy, may become a difficult decision.
