Polyester sales in China rise as producers cut prices to reduce stocks

Chinese polyester producers are seeing a rebound in demand for their products as they slash prices in a fervent bid to reduce inventories ahead of the Lunar New Year holidays in 2025, market sources told S&P Global Commodity Insights.

Traders and producers in China reported positive feedback on a surge in polyester product sales over the past weekend, which has helped ease inventories.

"Polyester sales and production were very good over the weekend," a trader in China said.

Each year, prior to the Lunar New Year holidays, producers anticipate a major slowdown in production and factory activity as workers head home for the week-long festivities.

In an effort to cap inventories that could hurt profitability, polyester producers have opted to cut prices, which has helped stimulate demand, a purified terephthalic acid producer in Asia said.

"Actually, I think the low price caused the strong demand, [and] since the middle of October, the price of downstream products [has been] getting lower and lower," the PTA producer said.

China's domestic consumption has been under intense scrutiny amid worrying signs of an economic slowdown following the downturn in the housing market, sources said.

The recent sales bonanza for polyester products is welcome news for producers who were burdened with swollen inventories.

In the week to Dec. 13, inventories for partially oriented yarn stood at around 9 days, fully drawn yarn was down to around 17 days and drawn textured yarn was at around 22 days, a second Chinese trader said. The current inventory levels were considered to be on the lower side, according to sources.

"The prices were relatively low, so downstream buyers bought more goods," the second trader in China said.

PTA struggles continue

While polyester producers are pleased, upstream PTA producers have yet to reap the benefits of improved downstream sales, traders said.

PTA inventories in China have not reduced as much, which continues to worry producers and further hurt margins.

"No improvement; China's PTA supply is too much," a third trader in China said.

More Chinese domestic capacities are set to be added in 2025, totaling about 8 million-10 million mt/year, the traders said.

In the week to Dec. 13, PTA inventories in China stood at around 2.85 million mt, compared with around 2.75 million mt the previous week, the third trader said.

In the months ahead, the supply situation could potentially be exacerbated as China prepares to further ramp up its domestic capacities. The country is expected to produce around 71.5 million mt of PTA by the end of 2024, compared with nearly 64 million mt last year.

"PTA supply is always more than polyester demand," a fourth trader in China said.

However, some sources said that while overall PTA inventories in China remain high, there has been a slight improvement in stocks held at ports.

In the week to Dec. 13, PTA inventories held at ports stood at around 301,000 mt, compared with around 384,000 mt the previous week, the third trader said.

"The cumulative range of PTA products becomes smaller, and the port has less PTA to circulate," a fifth Chinese trader said, adding that this could lend support to PTA spot prices.

Platts, part of Commodity Insights, assessed PTA at $630/mt FOB China on Dec. 13, up $1/mt day on day.