Polyester Raw Materials Have Followed Crude Down. When It Reaches a Fabric Quote

What moved in the first ten days of November

That sits on top of the crude move we covered in Brent Falls Below 100: Brent futures fell from about 113 dollars a barrel on 30 October to a settlement of 92.57 dollars on 9 November. Two weeks earlier the chain was going the other way. Fibre2Fashion reported naphtha up about 3.5 percent across Asian assessments between 26 and 30 October, with paraxylene and PTA firming and polyester yarn flat or lower, which squeezed the people in the middle.

• Between 3 and 5 November, naphtha fell by up to 10.85 percent across Far East Asia, Japan and Southeast Asia, Fibre2Fashion reported on 11 November. Naphtha is the refinery stream that paraxylene is made from.
• Paraxylene, the direct feedstock for PTA, dropped about 7.8 percent in Taiwan and Korea over the same days, and the relief reached PTA within days, the same report said, headlining PTA down about 7 percent.
• The Chinese market data service CCFGroup headlined a cut to a major Chinese producer's November paraxylene contract nomination on 5 November, a weakening PTA spot basis on 9 November, and a 3.5 percent fall in the January paraxylene futures contract on the Zhengzhou exchange on 10 November.
• On 11 November CCFGroup headlined that Chinese polyester filament yarn export offers had declined sharply. Filament is one step from cloth, so this is the first sign of the fall reaching yarn.

Why this is the step that matters

Crude is the news; it is not what a spinner buys. Polyester is made from PTA and MEG, and PTA is made from paraxylene, which comes from naphtha. Our Textile Decoded lesson Polyester: From Crude Oil to Fiber walks through each stage. A fall in crude that never reaches PTA never reaches a fabric quote, and in October the chemical chain held up for weeks after the headline price had started to fall.

This time the fall has crossed from crude into naphtha, paraxylene and PTA within about a week, and the first yarn signal has followed. That is the difference between hoping inputs will ease and being able to say they have started to.

What has not moved yet

• Polyester yarn quotes have eased more slowly than the chemicals, Fibre2Fashion reported. Spinners work through fiber they bought earlier before they price on today's PTA.
• The chain is not falling in a straight line. On 11 November CCFGroup also headlined paraxylene rising after naphtha and the January PTA futures contract closing 0.91 percent higher, so the first day of yarn relief was also a day of a small rebound upstream.
• Viscose does not follow any of this. It is made from wood pulp, so the viscose share of a poly-viscose blend is untouched by naphtha and PTA.
• Crude can turn. Brent's fall rests on hopes of a settlement with Iran, and ship attacks around the Strait of Hormuz were still being reported in early November. If crude goes back above 100, the chemicals will follow it up faster than yarn followed them down.

When a buyer can expect to see it

Roughly in this order, each with a lag: PTA and MEG over days; polyester staple fiber and filament over one to three weeks as producers reset their monthly prices; yarn as spinners finish older fiber stock; and woven cloth only on yarn bought at the new price. On a typical poly-viscose suiting or shirting order that means a quote issued in late November may still sit on October yarn, and one issued in December is the first that could reasonably reflect early-November chemicals.

The size of the effect depends on the blend. Polyester is one input among several in the cost of a finished uniform cloth, alongside viscose, weaving, dyeing and finishing, so a 7 percent fall in PTA does not mean a 7 percent cheaper fabric. A 100 percent polyester cloth feels it most, a 65/35 poly-viscose less, and a viscose-rich blend hardly at all.

What we would do as a buyer

• If you received a quote on polyester-rich cloth in the second half of October, ask for it to be reviewed at your next order, and ask when the mill's yarn was bought. That question gets a more honest answer than asking for a percentage off.
• Keep quote validity short in both directions. The chain has moved up and down by several percent inside a fortnight twice this autumn.
• Do not hold back a programme that has a delivery date. Waiting two weeks for the last few percent on PTA is rarely worth a short delivery on a uniform roll-out.
• For a current quote against current yarn, Request Catalog and tell us the blend, weight and quantity.

What we are not claiming

• That our prices have changed. Every quote depends on construction, quantity and when its yarn was bought, and we do not publish prices.
• That the fall will hold. These are a week's moves in a market that reversed twice in October.
• Any figure beyond what the reports above say. Fibre2Fashion's full articles are behind a paywall and CCFGroup's bodies are for subscribers, so we have used their published headlines and summaries only.