Large polyester filament companies release signals to cut production under heavy losses

On March 28, major manufacturers of polyester filament yarn announced measures to "maintain the healthy development of the polyester filament industry and decisively avoid a price war characterized by internal competition." The large PFY manufacturers plan to cut production by 10% for one month, with implementation and supervision to be enforced in early-April. If the three major manufacturers carry out this 10% reduction, it will involve a production cut of over 2 million tons, which could lead to a decrease of operating rate in direct-spun PFY plants by approximately 5-6%.

After the Spring Festival, players in the polyester filament and downstream markets have felt a "chill".

The fabric manufacturing sector missed its expected boost during "Golden March," with orders and delivery of grey fabric falling short of expectations, leading to order volume being at the lowest level seen in recent years; meanwhile, inventory of grey fabric are at their highest in recent years.hr_wordimg_1743389470236_102664.png

The weak market conditions in February and March have been shaped by multiple factors. Some spring orders, influenced by low prices in December and a rising atmosphere in January, were partially released ahead of the Spring Festival. Additionally, the de-stocking of autumn and winter fabric has not gone well, and collection rates for companies before the Spring Festival holiday did not meet expectations, resulting in a lack of liquidity for company operations after the holiday. The weak price performance in the industry and abundant domestic capacity have dampened enthusiasm for stocking summer fabrics. Imports of finished apparel from developed countries like the U.S., Europe, and Japan in the fourth quarter of 2024 were pulled forward, especially in the U.S., where tariff factors have affected some direct and indirect orders shifting to Southeast Asia. Furthermore, in March, Muslim countries were in Ramadan, which impacted the export rhythm of certain textiles.

After the Spring Festival holiday, the operating rate of DTY plants and fabric mills was low in the same period in history in Zhejiang and Jiangsu, hard to change temporarily. PFY companies saw mounting inventory, and the pressure of fine denier FDY was more apparent. The inventory of FDY was far higher than the corresponding period of last year.

The inventory pressure is reflected in absolute prices, with FDY fine denier yarn being among the first to drop below the lowest value seen in 2024, showing significant cash flow losses.

Compared to mid-March, the cash flow for PFY has deteriorated significantly.

Currently, fine denier POY suffered losses, with mainstream 150D series mainly around the cost line. The losses of fine denier FDY were apparent, with some at 500-600yuan/mt. Coarse denier FDY was also near the break-even line.

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