Feedstock Crisis and Supply Troubles Support PSF Prices in the US and Europe

The prices of Polyester Staple Fibre (PSF) continue to surge in the US market in early March 2024. Since the beginning of 2024, the PSF market has been facing multiple challenges, pushing its price consistently upward. These challenges include a tight raw material supply and high production costs. During this period, the PSF prices reflect similar trends in both the US and German markets.

In the US market, the PSF prices have surged more than anticipated in February 2024, notably by more than 3%, and the trend seems likely to continue in the coming month. This price growth is primarily driven feedstock support, as during the previous month, the major feedstock, Mono Ethylene Glycol (MEG), experienced an incline of more than 12%, and Purified Terephthalic acid (PTA) increased by around 2.2% in the US market. The market has been on an upward trajectory since November 2023, growing by around 11.5%, even after the end of the festive season. On the demand side, the downstream textile market continues moderate procurement activities while the weather condition has started shifting from peak winters to spring. Supply from the Chinese market remains slightly lower compared to the previous month, amidst the high inventory of PSF in the Chinese market. However, complexity is added further by the import price, as the US has experienced a significant growth in import prices, reportedly by more than 1% in the month of February.

Similarly, the European PSF market experienced a persistent rise in prices during February 2024 due to supply curtailment. However, a different story unfolded in the meantime in Germany, where PSF prices continued to rise under the influence of tight raw material supply, resulting in a price of USD 1386/MT CFR Hamburg in February 2024. However, China, the textile industry’s hub, proposed lowered PSF prices due to high inventory and low domestic demand after the Lunar New Year festivals. Market sources indicate that the holiday season in China has recently passed, which has brought the temporary post season dullness. Additionally, the recent Red Sea shipping crisis caused a shortage of raw materials like Purified Terephthalic Acid (PTA), leading to a temporary slowdown in operational activities. The demand-supply fundamentals have been disrupted within this timeframe, and the gap between supplies and consumption has remained wide enough to support this price trajectory.

According to ChemAnalyst, the price trend for PSF may continue the upward trend in the US and German markets under the influence of anticipated rise in demand from the downstream textile industry in early spring. Feedstock prices may continue to support the price trend as per the current scenario.