Kong Lingfang, CCFGroup, delivered her speech of Current status and outlook of China PSF industry chain. The presentation included a review of the polyester staple fiber market in 2023, an analysis of the market situation in the spinning chain, the status quo of Q1 2024 and outlook.

In 2023, new capacity invested in direct-spun PSF reached 780,000 tons/year, excluding long-term idled or exiting capacity of 350,000 tons/year. Therefore, the net increase in direct-spun PSF capacity in 2023 was 430,000 tons/year, reaching a total of 9.43 million tons/year, with a growth rate of 4.8%, the lowest in the past five years. Jiangsu, Zhejiang, and Fujian remained the top three regions in PSF capacity. In 2023, Zhejiang, Jiangsu and Fujian's direct-spun PSF capacity shared 89%, up 6 percentage points from 2018. In Q1 2024, the top four direct-spun PSF plants held 49% of the capacity, up by 4% from 2018. China exports 1.2 million tons of PSF in 2023, a substantial increase of 20%.

In recent years, the spinning market trends have been largely influenced by external factors such as geopolitics and pandemics, rather than supply and demand dynamics. Regarding polyester yarn, there was a notable increase in finished product inventories in yarn mills. This led to yarn mills reducing their raw material inventories and average operating rates. Despite these adjustments, spinner profits in 2023 remained unsatisfactory.

In Q1 2024, with external influencing factors weakening, market trended again with the fundamentals. However, price fluctuations may increase due to geopolitical issues and potential U.S. interest rate cuts. In Q1 2024, the average operating rate of direct-spun PSF was 77.4%, roughly the same as last year, with a decrease of 1.5 percentage points compared to 2022. The production of direct-spun PSF in Q1 was 1.81 million tons, an increase of 100kt (5.8%) year-on-year.

Since Q4 2022, overseas textile and apparel industries have actively reduced inventory. By the end of 2023, US wholesale clothing and fabric inventory had dropped by 25%, nearing the end of destocking. Branded footwear and apparel inventories, like Adidas and Nike, also fell back to early 2022 levels. After destocking in the end-markets, there could be a new round of raw material procurement.