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                HC recycled PSF steps into loss despite of high spread with HC virgin PSF – ChinaTexnet.com
                Home >> Textile News >> HC recycled PSF steps into loss despite of high spread with HC virgin PSF

                HC recycled PSF steps into loss despite of high spread with HC virgin PSF

                2022-06-29 08:52:05 CCFGroup

                There is a peculiar phenomenon this year: price spread between HC virgin PSF and HC re-PSF has expanded to 2,000yuan/mt, while currently, both of them faces losses.



                1. HC virgin PSF: low operating rate and high costs


                After the Chinese Lunar New Year holiday, crude oil prices have been constantly rising, and polymerization costs keep advancing. Driven by surging PX price, the polymerization costs hit 8,000yuan/mt on Jun 7, rising further to 8,300yuan/mt on Jun 8, a new high since 2019.


                With unsmooth sales, HC virgin PSF plant operating rate is low, below 60% currently, and the cash  flow faces larger losses. Price spread between HC virgin PSF and HC re-PSF enlarges, and competition from new capacities of HC virgin PSF is fierce.



                2. HC re-PSF: early shutdown and high inventory



                HC re-PSF sales are unfavorable as well this year, so many plants begin suspend operation or cut production from Apr. Currently, inventory in Zhejiang is relatively high, mostly at 20-30 days, highly at 50 days. Therefore, under the slack season, plants are hesitant to raise the prices, and focus on selling. In addition, affected by the epidemic, bottle consumption reduces, and supply of recycled PET flakes is tight. With the demand flow to sheet and 3A-grade white flakes, PET flake prices continue to rise, and some HC re-PSF plants have stepped into losses.


                For the reason behind, the key is the oversupply. HC virgin PSF and HC re-PSF market continues to expand capacity, but demand is especially weak this year. The supply outside China recovers, squeezing the export shares. Chinese market sales also face large pressure, especially under the impact of epidemic. With weak demand, traders also only purchase on need-to-basis.


                For late market, demand may keep weak in slack season. With the firm recycled PET flakes market, HC re-PSF prices are supposed to be easy to rise but hard to decline. HC virgin PSF may mainly fluctuate following the cost side. In addition, production costs, like water, electricity and gas, continue to rise in some regions, and plants face more difficulties.