Downstream stocking drives PFY demand rise ahead of lunar New Year

In mid-December, a wave of large-scale centralized procurement from downstream sectors significantly boosted PFY sales, with some factories reporting sales ratios exceeding 1,000 per cent. This surge, primarily driven by downstream stocking ahead of the lunar New Year, led to tight product availability and even stockouts for some specifications, particularly in the POY sector.

Downstream players, encouraged by low PFY prices and a slight improvement in end-user demand, aggressively replenished their inventories. This included stocking up for the post-Lunar New Year period to secure raw materials. However, this concentrated replenishment has left PFY factory inventories at low levels while downstream mills face a dual high inventory situation of both raw materials and finished products.

A final wave of replenishment is expected around mid-January before downstream companies begin their Lunar New Year holidays. The intensity of this wave will likely depend on PFY price discounts.

Looking ahead, the extent of Spring Festival maintenance in PFY factories will be crucial. If maintenance is minimal, both PFY factories and downstream plants may face pressure from finished product inventories, potentially impacting PFY pricing power.