Production is still rising! prices continue to fall! when will polyester filament hit the bottom?

This week, the downward trend of polyester filament has not stopped, continuing to drop by 50-100 yuan/ton compared to last week. When will such continuous decline come to an end?

The thunder is loud, but the rain is light in the reduced harvest.

Recently, with the continuous decline in polyester prices, news of reduced production for polyester filament has been rampant. Reports indicate that two factories in Wuxi have shut down for maintenance, with one having a capacity of 240,000 tons and the other 400,000 tons. Two leading enterprises in Tongxiang have a combined maintenance of 1.645 million tons of capacity (1.495 million tons + 150,000 tons). A large factory in Xiaoshan has a 150,000-ton unit undergoing maintenance, while an 80,000-ton unit in a factory in Shaoxing has stopped production. The Ningbo region has seen particularly concentrated reductions, involving multiple companies, including a complete shutdown of a 250,000-ton unit, maintenance of 144,000 tons and 120,000 tons units, and a complete closure of another 120,000-ton capacity. The northern and Shandong regions have also been affected, with a factory in Liaoning having a 200,000-ton unit undergoing maintenance, and a small enterprise in Weifang, Shandong, halting a capacity of 35,000 tons. If we add up all these capacities, the total amount involved reaches as high as 3.384 million tons, which is quite substantial.

According to data statistics from Longzhong Information, in the recent week, the production of polyester filament reached 759,200 tons, an increase of 9,600 tons compared to the previous week, with a growth rate of 1.28%. The capacity utilization rate was 92.94%, an increase of 1.17 percentage points from the previous week. The production of polyester filament not only did not decrease but instead increased.

From the current situation, this round of production cuts indeed seems to be all noise and no substance, and it has largely contributed to the downward trend in polyester filament prices.

No promotions, no selling silk.

Although the reduction in polyester filament production is insufficient and the output has increased instead of decreased, the final result is a continuous increase in inventory. With prices continuing to decline and a significant halt in production on the weaving side during the off-season, the downstream market is currently showing a clear wait-and-see attitude, with only essential purchases being made.

Since late June, the production and sales of polyester filament have been mediocre. Last week, the weekly average production and sales rate of polyester filament was 37%. During the week, the overall production and sales rate of manufacturing enterprises was around 30-40%. Only on July 10 did the production and sales rate see a partial rebound, reaching around 200% on that day, with the average production and sales rate of sample enterprises exceeding 50%. This week, the weekly average production and sales of polyester filament has not shown significant improvement, remaining at only 38%, with production and sales under pressure. The inventory of manufacturing enterprises continues to grow. As of July 17, the inventory of polyester POY factories rose to 25.4 days, the inventory of polyester FDY factories increased to 25.6 days, and the inventory of polyester DTY rose to 30.7 days.

Once the inventory comes under pressure, polyester factories begin to promote discounts, leading to a continuous decline in the price of polyester filament.

Polyester chips have started to reduce production.

Although the reduction in polyester filament production is currently not as strong as expected, the reduction in another important area of polyester, polyester chips, is being carried out vigorously. On the evening of July 3, Wankai New Materials announced that, based on the overall industry situation and the company's production and operational needs, it plans to gradually adjust its PET production schedule starting from recent days, and will organize equipment maintenance during the reduction period. This production cut and maintenance will involve a PET capacity of 600,000 tons, accounting for 20% of the company's total capacity.

According to statistics, between June and July, several leading companies have joined the production reduction campaign: China Resources Chemical has started to reduce production by 20% at its three factories since June 22, involving a capacity of 660,000 tons of polyester bottle flakes; Sanfangxiang has cumulatively stopped 1 million tons of capacity since the end of May, with no confirmed restart date; Yisheng plans to implement production cuts starting July 1, with a shutdown of 750,000 tons at its Hainan base and 350,000 tons at its Daqing base. This concentrated production reduction involves a total capacity of 3.36 million tons, accounting for 16.3% of domestic total capacity. As the plan progresses, the domestic polyester bottle flakes operating rate is expected to drop to around 75%.

With the increased reduction in polyester chip production, the prices of polyester chips have begun to stabilize recently amid a decline in upstream raw materials, and profits have started to rebound.

Perhaps it will be only when the major factories in the filament sector truly reach a consensus on production cuts, like in the slicing industry, that the price of polyester filament can return to stability.