Global Polyester Filament Yarn Prices Dip, Future Increases Anticipated Amid Seasonal Demand

The global Polyester Filament Yarn (PFY) market experienced a downturn in early October, across all key markets, including Asia, North America, and Europe. In Asia, the overall decrease in PFY prices was primarily driven by a continued drop in feedstock Purified Terephthalic Acid (PTA) prices in late September 2024, along with lower-than-expected demand following the National Week Holidays and rising inventories. Since North America and Europe heavily depend on PFY exports from Asia, these factors also affected PFY prices in those regions. September 2024 saw historically low PFY pricing across Asia, North America, and Europe, attributed to prolonged depreciation in production costs, largely influenced by the decline in feedstock PTA prices.

In Asia, PTA prices fell by approximately 2.2% in late September 2024 before rebounding by about 4%, attributed to maintenance turnarounds at PFY plants and seasonal demand related to the festive Golden October, which is expected to exert upward pressure on global PFY prices in the coming weeks. However, rising inventory levels due to high operating rates and lower-than-expected demand continued to exert downward pressure on the Asian PFY market. Additionally, decreasing freight charges led to lower-priced imports of PFY in Europe, despite the challenges posed by strikes from the International Longshoreman Association at North American ports and the escalating crisis in the Red Sea.

During the National Day holiday (October 1-7), PFY sales in Asia were varied, averaging between 50-70%. Some companies reported balanced sales and production as prices gradually increased. Post-holiday, the average PFY inventory stood at around 18 days, alleviating the inventory burden that had affected polyester companies for an extended period. However, adverse weather and declining production costs renewed the cooling trend in the market, perpetuating a bearish sentiment, while PFY operating rates rose to approximately 91%, resulting in an oversupplied market.

At present prices of PFY were assessed at historically low of USD 904/MT FOB basis across Asia, USD 1325/MT CFR basis across Germany and USD 1378/MT CFR basis across North America during September 2024.

Freight rates from East Asia to Europe dropped by 6%. Similarly, rates from East Asia to the US East Coast decreased by 5% in early October, further contributing to lower-priced imports in both the European and North American markets.

In terms of demand, the US market showed strong demand for PFY, as clothing sales improved, despite the downturn in consumer spending. This led to a sales rise across nine retail categories, with a month-over-month increase of approximately 1% and a year-over-year jump of approximately 10% (unadjusted). Despite a bleak outlook for consumer spending amid election uncertainties, the demand conditions were positive.

Conversely, in Germany, the business climate for retailers declined, with the IFO indicator dropping from minus 7.2 points in August to minus 9.8 points in September, indicating sluggish demand for PFY as consumers cut back on spending.

Overall, PFY prices are expected to rise in the global market due to uncertainties in supply conditions in Europe and North America, along with increasing PTA prices in Asia as seasonal demand takes effect. Furthermore, this festive quarter is anticipated to strengthen procurement activities in textiles, typically starting in the fourth quarter.