On August 17, spot polyester staple fiber (PSF) prices in Jiangsu jumped 80 yuan/ton, with the mainstream trading center reaching 7,640 yuan/ton. While the increase appears moderate, it occurred when processing fees were squeezed to historic lows—suggesting that cost-side pass-through is no longer the only driver, and that active supply-side contraction is beginning to take pricing power. For downstream spinners, this rally may not be an isolated event but a precursor to a turning point.
Event Background
Public market data shows that the spot price range for PSF in Jiangsu on that day was 7,580-7,710 yuan/ton, with high offers touching 7,740 yuan/ton and low-end deals at 7,480 yuan/ton. Compared with the previous trading day, the mainstream price rose by 80 yuan, an increase of about 1.06%. Notably, the increase was not uniform; the high-low spread widened to 230 yuan/ton, indicating growing market divergence.
The persistently low processing fee is the deep background behind this price move. The processing fee, defined as the selling price minus raw material costs (mainly PTA and MEG), directly reflects profitability. When fees fall below cash costs, every ton produced incurs a loss, making output cuts a rational choice. Industry sources indicate that some small and medium-sized plants are planning to reduce operating rates or undergo maintenance, providing support to spot prices.
From a chain perspective, upstream PTA prices have been range-bound recently without significant gains, so the PSF increase is more attributable to proactive supply tightening. This implies that if output cuts fall short of expectations, prices may retreat; conversely, if cuts are firmly implemented, processing fees could recover to reasonable levels. The market is trading expectations, not actual inventories.
Industry Impact
For downstream spinners, higher raw material costs will directly squeeze already thin margins. Given the current cotton-polyester price spread, PSF's cost advantage in blended yarns is narrowing, and some orders may shift to pure cotton or viscose. Procurement managers need to reassess raw material blends rather than simply chase the rally.
For PSF producers, this price increase is a tentative move. Industry operating rates have already fallen from highs, but no large-scale concentrated cuts have occurred. If prices can hold above 7,600 yuan/ton, cash flow pressure will ease, reducing the incentive for further cuts and potentially capping upside. This game theoretic dynamic amplifies short-term volatility.
In foreign trade, transmission lags. As an intermediate good, PSF price changes typically take 2-4 weeks to reflect in fabric and garment export quotes. For exporters with signed orders, this increase erodes profits, necessitating immediate price locking with upstream suppliers. For orders under negotiation, costs must be incorporated into quotes to avoid future losses.