SunSir: Boosted by Favorable Cost, Prices of Polyester Staple Fibers Slightly Rebounded

Price trend

Driven by the favorable cost side, the domestic polyester staple fiber market showed a slight rebound in July. According to the Commodity Market Analysis System of SunSirs, as of July 16th, the average factory price for 1.4D * 38mm polyester short staple was 7,560 RMB/ton, an increase of 2.60% compared to the beginning of the month.

Analysis review

Since July, international crude oil futures have been fluctuating and strengthening. As of July 13th, the settlement price of the main contract for WTI crude oil futures in the United States was at 76.89 US dollars per barrel, while the settlement price for Brent crude oil futures was at 81.36 US dollars per barrel. Inflation in the United States had cooled beyond expectations, the necessity for the Federal Reserve to raise interest rates had decreased, coupled with seasonal peak demand from refineries and OPEC production cuts in oil producing countries, heating up the oil market. PTA East China market had tightened its spot supply and reduced the supply of devices. The demand for downstream polyester was steady, the supply and demand of polyester had increased, and the market price had risen slightly. As of July 16, the average market price in East China was 5,980 RMB/ton, up 6.80% from the beginning of the month.

Under the pressure of rising raw materials, combined with the impact of high temperatures and off-season, the operating rate of downstream yarn factories continued to decline, with an increase in production cuts and shutdowns. The overall operating rate was around 60-70%. As of July 14th, the average price of pure polyester yarn in the Shandong region was 12,675 RMB/ton, a decrease of 0.59% compared to the previous month. Demand was weak, yarn enterprises lacked new orders, and the enthusiasm for raw material procurement was decreased, with a focus on just demand procurement.

Market outlook

Analysts from SunSirs believe that in the cost side PTA market, as suppliers continue to ship and there is insufficient buying demand, the growth rate of their own supply will also accelerate in the second half of the month, which will suppress the upward trend and the cost support for polyester staple fibers will gradually weaken. In addition, in the traditional off-season of the textile industry in July and August, even the pressure of rising raw materials is difficult to transmit downstream. With the hot weather and high temperature power restrictions, the terminal will still have negative feedback in the later stage, and it is expected that there is a downward risk in the price of polyester staple fibers in the second half of July.

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