China's Polyester Filament Yarn Prices Climb as Supply Shrinks and Global Demand Surges

The prices of Polyester Filament Yarn (PFY) in the domestic Chinese market saw a modest increase in the final week of October 2024, rising by over 1.1%. This uptick was driven by a combination of seasonal factors, ongoing supply constraints, and robust production levels within the polyester sector.

Supply-side constraints have been a significant factor affecting the PFY market. A critical shortage of Monoethylene Glycol (MEG), an essential feedstock for PFY production, has intensified in recent weeks. The two-week scheduled maintenance shutdown of Xinjiang Zhongkun’s ethylene glycol unit exacerbated this issue, tightening the MEG supply chain. As a result, PFY producers have faced higher input costs, which contributed to the price increase despite fluctuations in other feedstocks like Purified Terephthalic Acid (PTA). While PTA prices declined in the latter half of October, the lack of available MEG has remained the more pressing issue for PFY producers.

Despite these supply challenges, demand in the downstream polyester sector has remained strong. Manufacturers have continued to operate at high utilization rates, with polyester production levels holding steady. The ongoing strength of downstream demand, particularly as the textile sector prepares for the winter season, has been a key driver of price stability. This demand surge, coupled with the seasonal increase in purchasing activity, has prompted businesses to restock their inventories in anticipation of higher orders in the coming months, further supporting the price trend. The seasonal factor, with textile demand rising for cold-weather garments, is expected to continue fuelling this steady demand for PFY. In addition to domestic demand, suppliers in key importing countries such as the US and Germany have contributed to the upward price movement by replenishing their stocks ahead of the peak festive season.

The broader economic outlook in China also supports the positive price trend. Manufacturing activity showed signs of recovery in October, with firms increasing their purchasing activity and building up inventories due to confidence in future production. As manufacturing output expanded at an accelerated pace, the improved business sentiment contributed to a stable demand for raw materials, including PFY. This optimistic outlook, paired with the stronger-than-expected economic activity, has helped stabilize prices, despite the supply-side challenges.

Therefore, the PFY market in China is expected to remain under upward pressure, with prices likely to stay elevated in the short term. The continued scarcity of MEG and high feedstock costs, coupled with steady demand from the textile sector, suggest that PFY prices could see further gradual increases throughout the final quarter of 2024.