Double Negative Impact on Costs and Demand—Polyester Staple Fiber Prices Shift Lower in May

May 29 News:

According to the commodity market analysis system, the market trend for polyester staple fiber in May shifted downward. As of May 29, the average market price for polyester staple fiber (1.4D*38mm) in China was 7,831 CNY per ton, a decrease of 6.13% from the beginning of the month. Despite low production levels, support was limited. The volatile crude oil prices and the lack of orders due to the off-season in the textile industry had a negative impact on the polyester staple fiber market.

In May, the international crude oil market generally showed a downward trend. The primary factor behind this was the rapid shift from the previous geopolitical conflict premium to expectations of easing tensions through negotiations, coupled with negative fundamental factors. Under the combined influence of four key factors—the signals of resumed U.S.-Iran talks, the partial resumption of shipping traffic through the Strait of Hormuz, the IEA’s downward revision of supply-and-demand forecasts, and the sharp increase in API inventories—risk premiums that had previously been concentrated began to dissipate, leading to a downward trend in crude oil prices. Moreover, weak global demand and concerns that escalating geopolitical conflicts could weigh on the economy and oil consumption further drove crude oil prices sharply lower. Affected by the decline in crude oil prices, gasoline and diesel prices at China’s independent refineries remained at low levels. As of May 28, the settlement price for the July contract of U.S. WTI crude oil futures stood at $88.90 per barrel, while the settlement price for Brent crude oil futures contracts reached $93.71 per barrel.

As of the end of May, the spot price of PTA in East China was 6,258 CNY/ton, a decrease of 8.87% from the beginning of the month. The increase in maintenance and low operating rates provided limited support. The "rollercoaster" crude oil prices dominated the market, while the lack of orders during the textile off-season put pressure on prices. On the supply side, some facilities of the main PTA factories in China had already undergone maintenance in April and May, with the current industry operating rate being less than 60%.

On the demand side, the operating status of downstream polyester yarn enterprises is even more challenging, with the average operating rate in the pure polyester yarn industry standing at 69.81%. Overall, end-customer orders remain weak, and under high prices, substitution effects are becoming increasingly evident. As a result, end customers are primarily focused on digesting their existing raw material inventories, with limited new procurement activity. The weaving industry is doing its utmost to reduce operating rates and slow down the rise in inventory levels. Meanwhile, although there are expectations of potential tariff benefits, these have yet to materialize in the short term. Currently, due to persistently high ocean freight costs, export costs remain stubbornly high, and the end-market weaving sector continues to lack sufficient capacity to absorb additional output.

Analysts believe that the crude oil market is focusing on the geopolitical tension negotiations in the Middle East. If the conflict in the Middle East persists for a long time, it will not only lead to a continuous rise in oil prices but also exacerbate global inflationary pressures, thereby dragging down global economic growth. In the short term, the crude oil market is expected to see wide fluctuations. For PTA, there are expectations of two sets of units restarting next week, which will weaken cost support. On the supply and demand side, the load of polyester staple fiber is at a low level for the year, but there are expectations of new units commissioning in the coming months, and demand is gradually entering the traditional off-season. The contradiction between supply and demand in the industry has not been alleviated, and there are more bearish factors in the market. It is expected that the short-term price trend of polyester staple fiber will be weak.

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 polyester staple fiber market is entering a downward trend.

Combining the five-tier position: The current price is at a high to mid-high level in terms of the one-year and 90-day positions, and there is a need to be cautious of short-term downward risks.