POLYESTER FILAMENT YARN DOWNSTREAM SECTOR DURING APRIL/MAY 2011

In the eastern economies polyester filament demand has remained uncharacteristically low at a point in time, when demand normally is strong.  Inventories in China have steadily grown over 25 days.  Downstream weavers and knitters report that they are have not been able to pass along raw material cost and labor cost effectively.  Further power shortages at Jiangsu and Zhejiang provinces have adversely affected productivity.  Tight monitory policy also has had an unfavorable impact on demand.  With these relatively large inventory levels, it is expected that output and subsequently demand can only pick up at a slow pace.  Further PTA and MEG rampant outages, will ensure that raw material supplies will remain in reasonable balance globally.  Taiwanese market has also experienced some eroding of demand due to high prices, and advancement of turnarounds is being seen.  Similarly production utilization rates fell modestly due to shrinking of demand in the Indian economy. 

In the North American market, other than the Bio-Component Filament (BCF) sector all other filament sectors are very strong.  Retail activities for the carpet sector, which is the prime consumer of BCF; have slowed down due to repeated prices increases.  Apparel business and upholstery business are making steady gains.  Texturising is running at high capacity and the automotive sector, which is the main driver of industrial polyester producers, demand for tyre and belting products continues to grow.  For the European market, home furnishing sector is reasonable, but by no means strong.  However, in contrast there is a sustained demand for filament in the automobile sector.  So we see signs of renewed demand in North America and somewhat in the European region, but it apparent that this demand may not have enough steam to pull up the productivity levels of the upstream market (PTA & MEG), in the short term.  But eventually an arbitrage window should open up, which would allow an uplift of plant activities.