The global polyester market is showing signs of strain as exports demand softens. This trend is evident in recent data from China, a major player in the polyester industry. Chinese customs data reveals that while September 2024 polyester exports increased year-on-year, they experienced a significant month-on-month decline across all categories. This downturn reflects a broader global trend, with weakening demand observed in key markets.

China's September slump

As reported in the ‘September polyester exports decline across the board’ story, China witnessed a significant month-on-month decline in polyester exports across all categories. While year-on-year growth remained positive for most products, the September figures revealed a concerning trend.

Table: China’s declining exports

China's September polyester exports totalled 981,000 tons, a 27,000-ton increase year-on-year but a substantial 141,000-ton decrease from August. This decline was observed across all product categories, including polyester filament yarn (PFY), polyester staple fiber (PSF), PET fiber chip, PET bottle chip, and biaxially oriented polyethylene terephthalate (BOPET) film.

There were several reasons for a drop in exports. The slowdown in China's economy is a significant reason. Reduced consumer spending and manufacturing activity within China have dampened domestic demand, impacting both production and export volumes.

Additionally, the global economic slowdown is impacting demand from key export markets. Rising inflation and recessionary fears in major economies like the US and Europe have led to decreased consumer spending on non-essential goods, including textiles and apparel, which are major end-uses of polyester. Furthermore, fluctuations in the RMB exchange rate have created uncertainty in the market, making international buyers hesitant to commit to large orders. This cautious sentiment was particularly evident during August and September when the RMB experienced significant volatility.

India's polyester industry

Much like China, India, another major player in the polyester market, is also experiencing challenges. While specific export data for September is not available, industry reports suggest a similar trend of declining exports and increasing imports. The reasons are varied.

Impact of Turkiye's safeguard measures: Turkiye's decision to extend safeguard measures on polyester staple fibers has impacted Indian exports, leading to a loss of trade.

Quality Control Order (QCO) on imported yarn: The Indian government's QCO mandating BIS certification for imported yarn has led to a decline in cheaper polyester yarn imports from China.

Minimum import price (MIP) on synthetic knitted fabric: The imposition of an MIP has further restricted imports of cheaper polyester fabric from China.

Overall, the slowdown in the Chinese and Indian polyester markets reflects a broader global trend. The International Textile Manufacturers Federation (ITMF) reports a decline in global textile production and exports in recent months.

It says the pace of global economic recovery will significantly impact demand for polyester products. Crude oil prices also impact polyester as a key raw material in its production any fluctuations in crude oil prices can affect production costs and profitability. Meanwhile, growing awareness of the environmental impact of polyester is driving demand for recycled and sustainable alternatives. And innovations in polyester production, such as bio-based and biodegradable options, are expected to shape the industry's future.

Future market outlook

The immediate future outlook for the polyester industry remains cautious. The ongoing global economic slowdown and uncertainty in key markets suggest that demand may remain subdued in the near term. However, there are some potential bright spots. If China's economy recovers faster than anticipated, it could boost domestic demand and potentially revitalize export activity. The ongoing diversification of global supply chains away from China could present opportunities for other polyester-producing countries, including India, to increase their market share. And the development of new applications for polyester, particularly in high-value sectors like technical textiles and non-woven fabrics, could drive future growth.

Overall the decline in polyester exports is a reflection of the challenges facing the global economy. While the near-term outlook remains uncertain, the industry's long-term prospects will depend on factors such as global economic recovery, shifting supply chains, and innovation. Both China and India, as major players in the polyester market, will need to adapt to these changing dynamics to maintain their competitiveness in the global arena.