Polyester Staple Fiber (PSF) prices remained low globally in December 2024, largely due to declining production costs and an oversupply of PSF driven by aggressive production previously by the key producers. Higher inventory levels, anticipating a surge in demand around Christmas and New Year, also contributed to the subdued PSF market.

In the United States, PSF prices declined by 3.93% in the first half of December. This downward trend was supported by adequate overseas imports and weakening purchasing sentiments. Despite the holiday season boosting spending, retail sales growth remained moderate in November, as per the CNBC/NRF Retail Monitor by the National Retail Federation. Clothing and accessories stores saw a slight 0.18% decline month-over-month but reported a 4.21% year-over-year increase. Similarly, general merchandise stores recorded a 0.05% monthly drop but a 2.01% yearly rise in unadjusted sales.

The U.S. Bureau of Labor Statistics reported a 0.3% rise in the Consumer Price Index (CPI) for November, following consistent monthly increases of 0.2%. Rising inflation further dampened consumer purchasing power, negatively impacting PSF market sentiment.

Sluggish market conditions prompted manufacturers to recalibrate both imports and domestic production. Industrial production declined by 0.1% in November after a 0.4% drop in October, according to the Federal Reserve. While manufacturing output rose by 0.2% in November, it remained 1% below its year-earlier level, highlighting challenges in sustaining PSF production.

The European PSF market closely mirrored trends in the U.S., with prices declining by 4.03% in Germany during the first half of December. This reduction was largely attributed to an influx of low-cost overseas imports and lower domestic production costs. Feedstock trends offered a mixed narrative: PTA prices dropped by 2.5%, while MEG prices rose by 2.3%, collectively shaping the overall PSF production costs in the region. Meanwhile, Brent Crude prices softened slightly, falling from USD 75.63 in October to USD 74.35 in November, as per EIA data.

Energy costs also played a pivotal role in PSF pricing dynamics. Energy product prices saw a year-on-year decline, while electricity costs fell in November compared to November 2023. Concurrently, PSF supply increased during the period, but demand from the textile sector remained moderate. This imbalance between supply and demand further influenced PSF price trends, maintaining subdued market sentiment.

In Asia, PSF prices followed a similar trajectory, with the Chinese market witnessing a significant 6.17% drop in the first half of December. Declining trading sentiment, coupled with high production rates, led to elevated inventory levels. Manufacturers responded by adjusting operations. As the year-end approached, many factories prioritized fund recovery reduced finished product inventories, and started offering notable discounts on the items. Amid limited domestic and international trade orders, some companies streamlined operations to alleviate burdens. Consequently, the polyester yarn operating rate experienced a slight decline during December’s second half.