On June 25, the average sales-to-output ratio of sample polyester filament yarn enterprises plummeted to 29.5%, down 16.1 percentage points from the previous trading day. This means less than 30 tons out of every 100 tons produced were absorbed by the market. The sharp downturn on the cost side is pushing the chemical fiber supply chain into a new round of wait-and-see, while downstream weaving mills have notably slowed their procurement pace.
Cost Collapse: Linked Decline of PTA and MEG The prices of PTA and MEG, direct raw materials for polyester filament yarn, have been weakening recently. Fluctuations in crude oil prices combined with loose supply-demand balance in the polyester chain have continuously eroded the cost support. When raw material prices enter a downward channel, price adjustments by polyester filament yarn producers often lag, creating a temporary spread between falling costs and slower-to-fall selling prices. This spread reinforces the 'buy on rising, avoid on falling' mentality among traders and weaving mills—waiting for lower prices becomes a rational choice.
Historically, a sales-to-output ratio below 30% usually signals rapid inventory accumulation. The current 29.5% ratio is close to the low level seen in the same period of 2023, suggesting rising inventory pressure for polyester plants. If the cost side continues to deteriorate, some enterprises may resort to production cuts or maintenance to balance supply and demand.
Demand Side: Divergence Between Weaving Operating Rates and Procurement Intent The micro-structure of the sales data reveals more. Among the 18 sample companies, 6 reported a 0% ratio, and another 4 were below 20%. This distribution indicates that downstream procurement is not uniformly contracting but shows extreme divergence between 'head orders shrinking and tail zero transactions.'
Major weaving clusters in Shengze, Changxing, and Xiaoshan currently maintain operating rates of 60-70%, but new orders are dominated by short-term and small batches. Fabric traders report that end-brand apparel clients are cautious about stocking autumn/winter fabrics, leading weaving mills to avoid building large inventories of polyester filament yarn. The decline in the sales-to-output ratio is essentially a lagged response to weak end-demand transmitting upstream.
Inventory and Price Expectations: Short-term Gameplay Intensifies For polyester plants, a 29.5% ratio implies an inventory increase of about 3-5 days. Given the industry's normal inventory turnover of 15-20 days, if this ratio persists for a week, inventories will approach a warning level. At that point, plants may be forced to cut prices to stimulate sales, further depressing market expectations.
For buyers, current prices have yet to fully reflect the cost decline. Spot prices of PTA and MEG are still finding a bottom, and while cash flow margins for polyester filament yarn have narrowed, the industry has not yet reached a loss-making threshold. This means a 'price war' in the short term is not impossible.