Over the last quarters, manmade fibre and especially polyester prices have been under marked pressure. Analyst Reto Amstalden from Swiss Helvea (research, sales and trading) has said in an article that the reason behind deteriorating fibre production may be due to a slowdown in the strong investment cycle of manmade fibre production equipment seen over the past few years.

Amstalden points out that oil supply has been flat this situation suggests increasing oversupply of manmade and polyester production capacity which made conversion (profit) margin of polyester filament producers to fall in the negative. According to him, the overcapacity situation may become more severe, as a significant amount of new production capacity is presently and in coming quarters coming on stream.

According to a publication of PCI Fibres in March 2014, China’s capacity of polyester filament was 31.3 million in 2013, which was more than global mill consumption of 29.7 million tons. Global consumption of polyester filament increased 6 per cent as against 2012. However, China’s polyester filament capacity continued to increase 17 per cent during 2013, and a further rise of 8 per cent is expected in 2014, outperforming the consumption of polyester filament. Amstalden concludes this might hamper the capacity utilisation rate for Chinese producers from around 80 per cent in 2012, to 70 per cent in 2014-15, taking into account that China accounts for about 65 per cent of global manmade fibre production.

According to PCI, China's capacity in nylon filament is growing more quickly than global mill consumption. It will account for around 70 per cent of the world nylon filament demand within the next two years, if no ratoinalisation of capacity takes place.