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Will downstream transfer production after surge of PSF?
Since the third decade of Jul, pushed by cost, direct-spun PSF hiked by about 2,700yuan/mt in just over one month. However, VSF and cotton do not experience such an increment. Price spread between direct-spun PSF and these two keeps narrowing. Thus, will downstream change the feedstock used and transfer production? 



Firstly, in terms of pure spun yarn, polyester yarn hikes quickly in line with surging PSF. Cash flow of polyester yarn performs better than that of cotton yarn and rayon yarn. For spinners, the production can sustain so long as the cost can be transferred and the profits can be guaranteed. If changing products, they will have to change customers accordingly, which is unrealistic for spinners. Therefore, there is no sign of substitution among these three pure spun yarns. 



Secondly, in terms of blended yarn, the price of blended yarn containing PSF follows up the surging PSF at a slow speed. As a result, the cash flow is compressed continuously and spinners step to the edge of cost line. Therefore, it is urgent for blended yarn containing PSF to change feedstock used. 



For polyester/cotton yarn, it is said that the feedstock direct-spun PSF has been partly replaced with recycled one. This kind of substitution mainly happens to the products with lower requirement for blemish and dyeing. At present, price gap between virgin PSF and recycled one widened to 2,000yuan/mt. If the spread sustains, the replacement will be more obvious. 



As things stand, the substitution mainly exists inside polyester industry and does not extend to cotton and VSF, and it is also seen in blended yarn rather than pure spun yarn. 

The pressure of cost transfer is mainly put on weavers as well as some spinners. For example, in the view of polyester sewing thread export, foreign traders pick up less goods at a slower speed, leading to high inventory of sewing thread plants. Among domestic fabric plants, offers follow up, but the increment is far from that of yarn. Under current losses, some fabric plants are cautious to take orders or the high offers cannot find buyers. If the situation continues, sales of PSF and polyester yarn will be seriously affected. 
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