Factors Affecting Prices of Polyester and the Staple Fiber Price Trends in 2023

Table Of Content

The pricing of a global in-demand product such as polyester fiber is never as simple as a single factor. It involves a sequence of elements that shift from one season to the next. One factor may play a key role in pricing in this season and another factor in the next.

For any company, increasing cost is not always a positive aspect. In the end, the ripple effect poses a challenge for consumer businesses.

We aim to highlight some factors that affect and shape the pricing trends of polyester fiber.

Factors Affecting Prices of Polyester Fiber

Cost of Raw Materials -Rising Oil Prices

A vital determinant of product prices is always the cost of raw materials. When prices change, the cost of final products has to shift as well to cover the margin. Polyester fiber products come from petroleum by-products. For years this has been the indicator of polyester fiber pricing. Oil prices continue to affect the pricing of raw materials. If the price of a barrel of petroleum oil changes, so does the price per kg of polyester staple fiber.

Processing and Production Costs

Manufacture of any product uses other resources like water, labor, and electricity. These add extra costs for the factory hence slight changes in the prices now and then. To reduce these prices energy-saving and consumption-reducing methods are key. Staple fibers with lower energy consumption during processing may also have lower prices.

Supply Chain Costs

We cannot talk about international trade without considering transportation costs. Exporting companies adjust product prices to factor in the costs of exporting it. Here we aren’t talking only about ocean freight charges. Shipping duration, port workers, import duty add to increase or decrease in price per kg fiber. These costs sometimes account for up to 28% of the cost of landing staple fiber per kg.

Regulations – Global and National Policies.

Manufacturing companies have to adhere to legal and political regulations in the region. Policies like anti-dumping duties and waste regulation impact the output capacity of factories. In turn, it affects the pricing of final products. A good example is when china announced the ban on the importation of plastic wastes. Alternative suppliers could not replace the falling exports from the Chinese market. With low supply, the prices of  recycled  shot up.

Commodity Markets

Relating to the cost of raw materials is the competing commodity markets. How do they affect pricing? In a concept known as cross-interference. It happens when companies use the same feedstock or produce competing (substitutes) products. The result is a shortage of raw materials or market saturation with product alternatives. This leads to a supplier-driven market with high prices. Or, on the flipside a consumer-driven one with low-priced products.

Prevailing Market Conditions

The prevailing market conditions can shift prices even without changes in oil prices. A supplier’s market means increases in demand and short supply. For instance, when China put a ban on plastic wastes, there was a low supply of Recycled PET. Hence, the price of the now scarce Recycled PET had to increase.

Price Trends of Polyester Staple Fiber

The 2023 Price Trends

2023 records an all-time nose dive as prices declined from month to month starting in March. In China, the demand went low as supply remained abundant. This is because of canceling orders and suspension of downstream production worldwide. In March, the price of 1.4D PSF went down by US 11 cents/kg in China, while India’s 1.2D falling by US 7 cents/kg.

A 2023 price trend report for staple fiber indicates a fluctuating trend. The prices dip for most of the first half of the year. But at the onset of the last quarter, the trend shifts upwards. This trend could be due to two main events marking the year 2023.  the listing of polyester staple fiber on china’s futures market. These events could explain the downward trend in prices in the first half of the year.  The positive shift coincides with the listing of polyester staple fiber in the futures market.

For the Asian market, this has been good news. The year closes strong with a consistent upward trend.

The Impact of PSF Listing on China’s Futures Market on Pricing

Two polyester chain products are already trading on the Chinese futures market. First it was terephthalic acid (PTA) in 2006 by Zhengzhou Commodity Exchange. Later on in 2018 the Dalian Commodity Exchange listed Mono ethylene glycol (MEG). The staple fiber becomes the third product to list. In October 2020, ZCE added staple fiber to its futures trading. Opening at a price of Yuan 5,400/t, reports say the product hit the Yuan 5,832/t mark in only 20 minutes of trading.

Market players hope for a rise in demand for polyester. As this move helps to support and stabilize the staple prices.

It also gives manufacturers and consumers an arbitrage pricing advantage and hedging position.

The textile industry is a volatile one. Decisions happen across the supply chain daily. These affect how manufacturers have to price their commodity to stay in business. In the end, it is about understanding and keeping up with market trends.

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