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Weak Chinese Demand Drives Down Synthetic Fiber Prices in September

Global synthetic fiber prices fell by 21.7% in September, their steepest monthly decline in more than six years, according to recent data from consulting firm PCI Fibres.

Declining oil prices, currency devaluations in key textile production regions and slowing global demand due to curtailed economic growth in demand are all contributing to the declines.

After rising abruptly in late August, crude oil fell slowly and steadily throughout September, finishing the month at around 2 percent down for the month.

In Asia, the world’s largest fiber-producing region, synthetic fiber prices fell by 25 percent year-over-year, their biggest year-over-year drop since early 2009, due primarily to weak demand for filament polyester, by far the biggest fiber in terms of worldwide and regional volume.

Still-low capacity utilization rates, hovering around 76 percent, small orders due to expected price volatility and tightening liquidity have resulted in a slowdown in Chinese demand rather than the pick-up usually seen at this time of the year. Several textile company bankruptcies have put thousands of industry employees out of work.

Polyester filament prices fell by 2 percent between August and September.

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Chinese demand for staple has been slightly better than for filament and is expected to get a boost from seasonal demand for fiberfill in outwear for local consumption and exports.

Nylon 6 prices fell by an estimated 5 percent between August and September , pressured by low utilization rates and weak sales. Spandex prices are relatively soft as well.

Viscose prices in China have remained firm, rising 4 percent compared to August, and fiber producers have little to no inventory, as the fibers have replaced cotton in some knitted apparel. However, acrylic markets are slower than expected, as consumers seem to be favoring cotton over woolen aesthetics.

Asian synthetic fiber prices are almost 24 percent below the world average, their lowest relative position in almost 6 years.

The European synthetic fiber price index fell by almost 22 percent compared to September 2014, its smallest year-over-year drop in three months, but capping 12 consecutive months of double-digit declines. European prices remain 19 percent above the global average.

The U.S. index fell by almost 16 percent in September, the least of any major world region, but its biggest monthly drop since August 2009. The carpet sector has not yet seen the improvement in the housing market that it has been expecting. However, polyester filament demand from the strong North American auto industry remains high. Inventories are low and demand is stable, resulting in a relatively high sales-to-capacity level that is keeping U.S. prices 61 percent above the global average. It remains to be seen how long this will last and whether low Asian yarn prices will result in an upswing in imports.