PFY Entered Cold Season in Warm Spring

Since the opening of PFY (polyester filament yarn) Market this year, the price tendency has been very different with those in previous years, which is very calm and the trade volume even began to decrease constantly during the trading days, especially when the inventories increased greatly due to the weak sales. This week, the weakness of PFY market turned to be more obvious. In Shao Xing, China, a supplier offered discount ranging from 100 Yuan/ton to 300 Yuan/ton when making deals. Then many manufacturers brought out the similar movements during the trades and some products with high inventories were decreased in prices ranging from 200 Yuan/ton to 300 Yuan/ton. As the price tendency of PFY market showed downtrend, it can be judged that the whole market had entered a cold season.

 Since this year, European debt crisis has kept influencing the global economic market and the economic growth slowed down obviously. Recently, UN Secretary General, Ban Kimoon addressed that the global economy would still face slow-down and recession under uncertainties and different crisis and problems. On February 16, Moody’s Investors’ Service, the global rating agency warned 17 global and 114 European financial agencies that their credit level might be downgraded. This was the second time that Moody chose to put pressure upon European financial market. Professional visitors said this might be a signal for the spread of European debt crisis in the global market.

According to the custom data, the total import and export value was 272.6 billion dollars in January, 2012, dropped 7.8% year-on-year. The export value was 149.94 billion dollars, down 0.5%; import value was 122.66 billion dollars, down 15.3%. The export market in China is still weak due to bad situation in target markets, America, Europe and Japan. Besides, the declining consumption, high unemployed rates, and dropping import demand all affected the textile industry greatly.

 Geopolitics is still affecting the crude oil prices. The tense in Iran drove the oil prices up but the bad performance of European economy limited the increasing range of oil prices. On February 16, the futures price of light crude oil in COMEX increased to 102.31 dollars/bbl and the price of Brent April futures increased to 120.11 dollars. Although the oil prices went strong in the upstream market, the feedstocks prices of polyester began to drop. In Asian Market, PX price kept dropping in a week and closed at 1601 dollars on 16. Under the weakness of PX, the trading atmosphere of PTA market got bad at home and abroad. In Chinese market, the inquiries were around 9,050 Yuan/ton. In overseas market, the quotations of Taiwan cargo were around 1,200 dollars/ton.

After Spring Festival, the downstream textile market keeps mild. At present, the operating rate of downstream textile factories is still low, so the inventories of the downstream textile manufacturers are still in large quantities and their buying intention is down. Polyester yarn manufacturers chose to offer discount during trades in order to cut stocks and increase sales. In Shengze Market, China, a direct spinning manufacturer quoted FDY 50D/36F for 16,200 Yuan/ton and semi-dull FDY 50D/24F 15,100 Yuan/ton. As the sales remain weak in the textile market, the producing activity of the manufacturers is weak and their attitude of purchasing turned to be more cautious.

To sum up, the factor that affects the price tendency of polyester yarn is not the cost but the downstream demand. Moreover, the high inventory of raw material and grey fabrics and weak sales in the downstream market give pessimistic expectation for the aftermarket. Under unfavorable conditions in the market, the PFY market will not have big change and may keep going downtrend afterwards.