Fundamentals Weakened, Polyester Staple Fiber Price Center of Gravity Shifts Lower

May 24th, according to reports

Commodity market analysis system, this week (May 18-24) the Chinese polyester staple fiber market saw a slight decline. As of May 24, the average market price for Chinese polyester staple fiber (1.4D*38mm) was 8020 CNY/ton, a decrease of 1.78% from the beginning of the week.

With declining cost support and repeated U.S.-Iran negotiations, international crude oil prices have been highly volatile amid geopolitical factors. As of May 21, the settlement price for the July contract of U.S. WTI crude oil futures stood at $96.35 per barrel, while the settlement price for the July contract of Brent crude oil futures reached $102.58 per barrel. In the PX market, maintenance at some Chinese plants may be postponed, and downstream PTA plants are also scheduled for concentrated maintenance. Moreover, polyester plants are showing further intentions to cut production. Market sentiment remains cautious, with weak confidence weighing on prices and driving them lower.

The spot market for PTA in the East China region is showing a downward trend. At the beginning of the week, the average market price stood at 6,345 CNY per ton, down 5.33% from the start of the previous week. As for PTA production facilities themselves, the industry’s operating rate currently hovers around 60%. In China, plant restarts and maintenance activities are happening concurrently, and a few more units are scheduled for planned maintenance in the near future. Maintenance work is largely coming to an end, yet short-term supply in China remains relatively tight.

Downstream demand continues to weaken during the off-season, with costs declining and inventory pressure persisting. The price center of yarn factories has slightly decreased. Weaving operations are sluggish, with only about 50% of weaving factories in Jiangsu and Zhejiang operating, showing resistance to high prices, and mainly engaging in rigid demand procurement. Domestic textile sales are weak, with new orders showing weak demand. There are still some seasonal replenishment orders that have not been completed in the short term, but the subsequent order situation is unlikely to improve. End-user clothing companies show low interest in placing orders for autumn and winter new products.

Analysts believe that as tensions between the U.S. and Iran ease, and refinery purchases in Asia remain weak, oil prices will find it difficult to sustain a significant increase. PTA is currently in a maintenance cycle, with a substantial reduction in supply. Starting from June, maintenance units will gradually restart, leading to a marginal easing of supply, and the cost support will weaken. The downstream textile industry is still in the off-season, with demand primarily driven by basic needs. It is expected that the price of polyester staple fiber will continue to decline.

Additionally, according to Xianhuotong, the 10-day moving average has crossed below the 20-day moving average, and the difference between the two averages continues to widen in a negative direction. The 10-day and 20-day moving averages are diverging further, indicating that the PTA market is entering a downward channel.

Combining the 5-tier position: The current price is at a high to mid-high range for the year and 90 days, so one needs to be cautious of the short-term downward risk.