Crude oil prices have already fallen back to pre-Middle East conflict levels, yet polyester filament yarn prices remain nearly 1,000 yuan per ton higher. On June 24, WTI crude oil briefly dropped below $70 per barrel, and despite a slight rebound on June 25 due to geopolitical fluctuations, it fell back to around $70 on June 26. Meanwhile, polyester filament yarn prices only saw minor reductions of 50-150 yuan per ton, leaving a significant gap compared to pre-crisis levels. Behind this divergence lies a deep-seated game between upstream and downstream players in the polyester chain, involving inventory management, cash flow, and demand expectations.
Production Cuts and Inventory Control: The 'Slow Decline' Strategy
Data from industry sources shows that on June 24, the capacity utilization rate of domestic direct-spun polyester filament yarn plants was only 73.81%, a slight increase of 0.29 percentage points from the previous week. This rate is among the lowest in the past three years, indicating that polyester plants have already proactively reduced production. Low operating rates have helped control inventory accumulation, but current inventory levels remain high: POY plants hold 30 days of stock, FDY plants 35.7 days, and DTY plants 41.8 days.
For polyester plants, a sharp price cut in line with crude oil would turn paper losses on high-cost inventory into real losses. Therefore, they prefer to maintain a strategy of 'slow price declines and slow sales,' buying time. This approach is sustainable under low operating rates but further dampens the purchasing willingness of downstream fabric mills.
High Cash Margins and 'No Buy Unless Necessary'
From the futures market, PTA and ethylene glycol prices have essentially returned to pre-crisis levels, leaving polyester filament yarn with considerable paper cash margins. However, for fabric mills, these high margins signal further price declines. If they do not have urgent orders to fulfill, a one-month delay in procurement could mean cost differences of hundreds or even thousands of yuan per ton for the same product.
As a result, downstream fabric mills have entered a 'no buy unless necessary' mode. Industry data confirms this trend: sales-to-production ratios at polyester plants remain low, and trading volumes of polyester filament yarn are subdued. This wait-and-see attitude further increases inventory pressure on polyester plants, creating a stalemate where price cuts fail to stimulate demand.
Weak Demand Dominates: Domestic Lethargy and Limited Export Offset
The root cause of the price divergence is a combination of ample supply and weak demand, particularly in the domestic market. Unseasonably cool summer weather has delayed the launch of seasonal products like sun-protective clothing, reducing end-consumer textile demand. Meanwhile, the overall domestic textile market remains sluggish, with fabric mill operating rates staying low, further compressing demand for polyester filament yarn.
However, not all is bleak. With the full reopening of the Strait of Hormuz shipping channel, global crude oil and commodity trade flows are gradually normalizing. Several overseas economies are accelerating their recovery, which could boost international textile consumption. Export order growth may partially offset domestic weakness, providing a floor for the polyester filament market.
Outlook: Game Continues, Price Gap Repair Takes Time
In the near term, the weak supply-demand dynamic and wide price gap are likely to persist. Low crude oil prices pressure PTA and ethylene glycol, but high inventory and high costs limit the downside for polyester filament yarn. The tug-of-war between upstream and downstream will continue to drive market trends: polyester plants must balance inventory depreciation with cash flow, while fabric mills wait for clearer price signals.
For textile enterprises, refined procurement management is essential. Export market recovery may offer structural opportunities, but domestic weakness means overall conditions will remain challenging.