It’s been a month since I’ve restarted blogging here and tremendous marketplace activity sweeping off Polyester Filament Yarns (PFY) global marketplace. Here are some of the headlines for the May 2012 edition :
- Polyester POY and FDY prices nearly converging in China,
- Indian PFY prices increasing due to power shortages and anti-damping imposed on Chinese POY
- stable Vietnam PFY prices.
- ocean freight costs falling by end-May
Although mid-April/May is the hot season for textile manufacturing industry everywhere in world, so-far-realised PFY sales figures prove it wrong and point to a global slowdown in trading activity.
China local fabric production slowed down during April and fabric producers are facing ever biggest stock levels in their warehouse. PFY producers in Zhejiang/Jiangsu/Xiamen all reduced their POY/FDY/DTY output due to low demand from downstream textile producers.
Canton fair held beginning of May showed lowest Christmas orders given by European and American buyers. This is a clear indication of slowing down global demand in textile industry.
India local PFY prices set to increase slightly with increased cost of PTA/MEG imports into country and disrupts in electricity supplies throughout country. Apparently, electricity shortages are causing considerable output losses that leads to higher cost price and hence PFY prices.
Indian government imposed an anti-damping duty on China origin POY, increasing the prices of POY imported from China. This is good news for big producers like Reliance Industries, JBF Industries, Indorama etc. however small scaled DTY producers will have to suffer by accessing higher POY prices and losing competitiveness as compared to big boys.
It is still vague how India is set to cope with power shortages. Anyhow, India is still competitive at finer denier DTY items overall and particularly for Turkish buyers certain deniers are still atrractive.
Turkish PFY producer Korteks reduced prices of all items by 10 USC/KG, adding anxiety and worries in the market. End-users and yarn traders both are expecting a further 10 USC/KG cut on prices, although doesn’t seem feasible to me. Recently the price gap between import and local produced PFY were believed to increase and that move was expected to boost trading activity in Turkish market, however that could not be realised due to low import prices heard.
Ocean Freight Costs (40HC basis)
Ocean freight costs were heard at a range varying from 4000 to 4500 USD/40HC when announced end of April for China main ports to Turkey main ports and slightly more expensive or same level for Ho Chi Minh-Gemlik/Istanbul/Mersin Turkey. As we approach end of May, forwarders lowered their quoations to new levels of as 3350-3500 USD/40HC with empty spaces observed in shipping lines’ vessels operating Far East-Meditarrenan services.
In my opinion PFY prices are destined to fall down in China throughout May and June, dipping in July. Compared to 2010 and 2011 y-on-y levels (considering oil and intermediary prices back then) PFY prices have the margin to further slump to 2010 July levels. With global demand for PFY hovering around current low levels, it is very probable that Chinese PFY producers will continue struggling to keep the market strong and a harsh competition among producers will be observed.
Downstream textile producers and PFY traders will benefit in this market scenario. Asian Polyester intermediary contracts ( PTA/MEG/PX ) will most probably fall down to new lows that can be observed for 2012.
Financial woes in EU (Greece, Portugal, Ireland struggling and Spain to come) and slow growth in USA will eventually make 2012 a hard year for both upstream PFY producers and downstream end-users in the market.
Yusuf Kocer is a professional textile trader engaged in sourcing of Polyester filament yarns and fabrics. Information presented on this blog are his own personal views. You are welcomed to comment on his views and share the knowledge.