On June 26, the average sales-to-production ratio for sampled polyester filament enterprises fell to 27.4%, down 2.2 percentage points from the previous trading day. This means that for every 100 tons of polyester filament produced, only about 27 tons found buyers. As a key intermediate in the textile supply chain, this data is often a direct proxy for the operating willingness and liquidity of downstream weaving mills.
Behind the Sales Slump: Supply-Demand Dynamics
Looking at the specific distribution of the 20 sampled enterprises, nine had a sales ratio below 20%, with the lowest reaching 0%. Only a handful managed to hit the 40% threshold. This extreme divergence suggests that not all manufacturers face the same sales difficulty—some may have secured limited orders through price concessions or extended payment terms, while most spent a sluggish Wednesday waiting for orders.
Spot transactions in the polyester filament market were light, with participants adopting a cautious wait-and-see stance. This sentiment is not isolated. Since mid-June, the operating rate of downstream weaving mills has dropped for two consecutive weeks. The comprehensive operating rate of water-jet looms in the Jiangsu-Zhejiang region fell from 85% to around 82%. With limited incremental export orders for finished garments and the end of restocking after the 618 shopping festival, weaving mills' willingness to replenish raw materials has shrunk noticeably.
Dual Pressure from Costs and Inventories
Cost pressure on the polyester filament side has not eased. On June 26, international crude oil prices fluctuated in a narrow range, while spot prices for PX and PTA remained in the mid-to-high range for the year. High upstream raw material costs, coupled with downstream reluctance to accept high-priced inputs, have compressed theoretical processing margins for polyester filament producers to near the breakeven point.
On the inventory front, as of June 25, overall inventory days for the polyester filament industry had rebounded to 18-20 days, up about 3 days from the end of May. With the sales ratio persistently below 30%, destocking is accelerating. Some mills have begun to voluntarily reduce operating rates, but the overall operating rate of the polyester industry remains around 88%, and the supply-side cutback is insufficient to reverse the loose supply-demand balance.
Three Key Variables for H2 2024
The current low sales ratio is essentially an early vote on market conditions for H2. The Texcircle editorial team identifies three variables that will shape the direction of the polyester filament market over the next 3-6 months:
- **Recovery pace of overseas textile orders**: European and American retailers are still in a destocking phase, expected to last until Q4 2024. If Christmas orders are released on time, they could spur a rebound in polyester filament demand.
- **Timing of domestic autumn/winter fabric restocking**: The peak season for autumn/winter fabric preparation typically runs from mid-July to early August, but this year, downstream mills are leaning toward a 'make-to-order' approach, potentially reducing stocking volumes by 20%-30% compared to previous years.
- **Disruption from new PTA capacity**: China is expected to add approximately 5 million tons/year of new PTA capacity in H2 2024. The new capacity could lower raw material costs, freeing up profit margins for polyester filament, but may also intensify price competition.