The initial worry was that the inventories were building up as December started, due to seasonal low demand and difficulties were being encountered in passing the prices downstream. This change is evidenced by the fact that sales-to-output ratio increased by 50% during the start of December, and now are over 100%. Therefore, the rising inventories are becoming streamlined with good off take. This demand is up with the onset of the Chinese lunar year. Currently, with good downstream demand, planned expansions in china are 2 million MT’s in 2011. In the Taiwanese market, the downstream demand for filament has been good particularly for 75den DTY as there is a preference for lighter weight polyester fabric. However, exports are low, due to a strong currency, but domestic demand remains strong.
On the whole the western markets have had a strong demand for high tenacity filaments being used for industrial applications, particularly the automotive sector, as well as the apparel sector, where it is being seen as a substitute of high priced cotton. The overall strength in the market is seen by the fact that a 9cent/lb price increase was settled without any issue. Similar demand trend has been witnessed for the European market. The price has remained stable and strong, given that there has been a lower influx of imports, as Asia tries to fulfill its domestic demand. Again the automotive sector remains a sector with high demand, but home furnishings sector remains at a poor level. The same is the case for BCF (Bulk Continuous Filament) as carpet business is very soft in the North American market. Upholstery sector for both Europe and North America remains relatively soft.
The downstream dynamics for this particular product line are portraying a variable position of the market, some sectors performing better than others. What needs to be monitored is whether the cotton bubble will burst, and whether we would see a downward revision of the price of this commodity during 2011, thus reducing its juggernaut on polyester intermediate.
Conclusion: Downstream demand is variable, and not all sectors are performing equally well.
