Polyester industrial yarn plants have curbed price from falling for around one month but they were under pressure with plunging polyester feedstock and PET fiber chip prices. PIY plants chose to scale down output to prevent price from decreasing. Overall price of PIY sustained firm.
Market competition was escalating with rapidly expanding capacity in recent years, which resulted into falling profit on PIY market. Conventional PIY was obviously unprofitable in 2021. There was no new PIY capacity in the first half of 2022 but PIY producers were still under losses. To revert losses, big PIY plants intensively raised price in late-Jun and slashed operating rate to curb price from descending. That meant PIY price did not fluctuate in line with the cost side. From the angle of PIY factories, bigger sales meant larger losses when sales were not profitable. Sales volume would be impacted when the production was slashed while PIY could be profitable at least.
Downstream customers have been used to the price of PIY consistent with the polyester feedstock and bright PET fiber chip market. Therefore, most held bearish view when feedstock cost extended lower but PIY prices remained high, focusing on digesting PIY prepared before. However, downstream buyers gradually showed divided reactions. Some downstream enterprises gradually accepted high-priced PIY with good orders as they could transfer high cost by raising price, while most purchased PIY only on a need-to-basis or chose to reduce or suspend production.
PIY enterprises showed big determination to curb price from falling while it will be hard to break the predicament. If downstream buyers commonly accept the new price mode, PIY market will embrace its highlight. PIY market is oversupplied with excessive capacity. High profit will be hard to be practical under such status. The operating rate of plants will gradually ascend with improving profit. Some old units which have been offline for long will return to the market again, which will further drag down the profit. Only when the excessive capacity changes will the profit of PIY surge. There are two ways to alter the excessive status: the first is to reduce supply and eliminate some capacity. The second is to expand demand and explore new application fields. In recent years, the demand for PIY gradually expands while it fails to chase up the increase in supply, and it is difficult to develop new application field. Actually, some small PIY units have been eliminated from the market, far lower than the expanding size. With price competition and ongoing losses, some units may be eliminated later.
When PIY plants are firm in preventing price from dropping, some fixed expenditure still need to pay. If sales keep low and stocks continue mounting, PIY producers will be in plight as the working capital is impacted. Therefore, breaking the dilemma will be a tough process for PIY enterprises.
Post time: Aug-08-2022