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China’s filament yarn prices drop

Prices of polyester filament yarn have continued dropping in China since late September. Supply of and demand for MEG may be balanced in November, but stocks of MEG are anticipated to increase by 100 kilo tons in December. Meanwhile, downstream plants have entered the off-season, and demand may weaken.

Current inventory of polyester filament yarn is medium-to-high, and may accumulate at a later period, which may weigh in on its price. Downstream demand is muted. Purchasing on a need-to-basis is expected to have small risks, but the speculative restocking will have minor significance as stocks will occupy capital. If the price of polyester filament yarn keeps falling, and losses enlarge, polyester filament yarn plants may cut their run rate. Market players hold a bearish view toward market outlook. As for fundamentals, stocks of polyester filament yarn are supposed to accumulate by more than 100 kilo tons in November, and may rise by more than 300 kilo tons in December. If there is big stimulus, participants can have bargain-hunting, too, but market players would do well to retreat to the sidelines temporarily.

In view of the upstream market, current PX-PTA spread and PX-naphtha spread has hit a historic low, and some plants have suffered losses.