Production-Sales Ratio Drops Below 40%: The Waiting Game in Polyester Filament Market

The polyester filament market is undergoing a severe test of low production-sales ratios. Industry data from June 22 shows the average production-sales ratio of sampled enterprises stood at only 39.5%, a mere 1.3 percentage point increase from the previous trading day. This means that for every 100 tons of polyester filament produced, fewer than 40 tons were purchased by downstream users.

More strikingly, the distribution of ratios is extremely polarized: the highest hit 120%, while the lowest was 0%. Among the 20 listed samples, low values of 0% and 10% appear frequently, while only one exceeded 100%. This extreme divergence indicates that the market has not seen a systematic recovery; instead, a few enterprises achieved localized destocking through specific product advantages, while most continue to face mounting inventory pressure.

The Logic Behind Downstream Waiting

Downstream users remain cautious, and spot trading is thin. This is not an isolated phenomenon. From an industrial chain perspective, polyester filament prices are closely linked to upstream PTA and MEG costs, while also being influenced by end-user orders in apparel and home textiles. The current low ratio points to two core reasons:

• Volatility in cost inputs: Recent fluctuations in international crude oil prices have led to frequent adjustments in polyester raw material prices. Weaving mills find it difficult to identify the cost bottom and thus choose to delay purchases, waiting for clearer signals.
• Weak end-demand: June is traditionally a low season for textiles. Domestic market orders have limited increments, and foreign trade orders have yet to see large-scale replenishment as overseas inventories are still being digested. High fabric inventories at the end-user level have pressured weaving mill operating rates, naturally reducing their rigid demand for polyester filament.

The psychology of 'buying on rising, not falling' is amplified in this low-ratio environment. When price expectations are downward, downstream firms prefer to risk supply gaps rather than build positions in a declining channel.

Industry Impact and Price Expectations

A production-sales ratio persistently below 40% has structural implications for both upstream and downstream players in the chemical fiber chain.

For polyester plants, inventory pressure is building. Industry norms suggest a healthy ratio of over 80% to maintain stable inventory levels. The current 39.5% implies a rapid increase in inventory days, potentially forcing some plants to resort to price-cutting promotions at month-end to free up cash and alleviate storage pressure. This, in turn, reinforces downstream wait-and-see attitudes, creating a negative loop of 'the more prices fall, the more buyers wait.'

For weaving mills, the low ratio strengthens their bargaining power. As upstream polyester plants face destocking pressure, buyers can negotiate more favorable settlement terms in the spot market, such as extended payment periods or volume discounts. However, the risk is that if raw material prices continue to decline, the inventory held by weaving mills will also depreciate, making purchasing decisions more delicate.

Looking at price expectations, spot polyester filament prices still have room to fall in the short term. Unless crude oil sees a significant rebound or end-user orders unexpectedly surge, polyester plants will likely have to concede on pricing to boost their ratios.

Practical Recommendations

For Buyers - Adopt phased purchasing to avoid large one-time acquisitions: In a downward price channel, a 'small batches, high frequency' strategy reduces inventory depreciation risk and allows buyers to lock in relatively low prices amid market fluctuations. - Monitor polyester plants' promotional windows: Month-ends or quarter-ends are typically key destocking periods for plants, often accompanied by price concessions or payment term incentives. Communicate with suppliers in advance to plan purchases. - Strengthen information flow across the chain: Maintain frequent communication with weaving and dyeing mills to confirm actual operating rates and order status, preventing procurement mistakes due to information lag.

For Foreign Trade Firms - Lock in costs using exchange rate fluctuations: With current volatility in the RMB exchange rate, foreign trade firms should simultaneously lock in raw material procurement costs when signing forward orders to avoid the double risk of currency and raw material price fluctuations. - Monitor overseas replenishment cycles: Apparel inventories in Europe and the US are gradually being digested, and replenishment demand is expected to emerge in Q3. Foreign trade firms can sign forward supply agreements with polyester plants in advance to secure prices and capacity, enabling rapid response when orders pick up. - Optimize product mix: As margins on standard polyester filament shrink, shift toward differentiated products such as cationic yarn, micro-denier yarn, or functional yarn, which offer higher added value and face less price competition.