Crude oil prices have fallen back to pre-crisis levels, yet polyester filament yarn prices remain nearly 1,000 yuan per ton higher. This divergence is tearing apart the profit distribution logic along the polyester supply chain. On June 24, U.S. WTI crude oil futures dipped below $70/barrel intraday, erasing all gains from earlier geopolitical tensions. While a brief rebound occurred on June 25 due to renewed Middle East volatility, oil prices hovered near $70 again on June 26. Meanwhile, polyester filament yarn prices saw only modest cuts of 50-150 yuan per ton, still nearly 1,000 yuan above pre-crisis levels.
From a cost perspective, PTA and MEG futures have largely returned to pre-crisis levels, theoretically removing much of the raw material cost support for polyester. However, polyester plants face a different reality. Industry data shows POY inventory at 30 days, FDY at 35.7 days, and DTY at 41.8 days. These inventories were produced when raw material costs were high; if plants cut prices in line with crude, paper losses would turn into real losses. As a result, polyester mills have adopted a strategy of slow price reductions and slow sales. On June 24, some mills lowered quotes modestly, but the cuts fell far short of weavers' expectations. According to Longzhong data, the operating rate of direct-spun polyester filament yarn capacity was 73.81% on that day, up slightly by 0.29% from the previous week. Overall, current capacity utilization is at a three-year low, helping plants control inventory growth but also signaling a strong willingness to reduce supply.
For weavers, the high cash margins in polyester filament yarn imply significant room for future price declines. If they are producing for inventory rather than filling orders, delaying raw material purchases by a month could save hundreds or even thousands of yuan per ton, while the final product price remains the same. This expectation has fueled a widespread 'no-buy-unless-necessary' mentality. This attitude is not unfounded. Since June, domestic demand has been weak, particularly for summer categories like sun-protective clothing, which have yet to kick off due to unusually cool weather. With insufficient orders, weavers lack the incentive to stockpile raw materials.
The core issue is a weak supply-demand balance and insufficient domestic demand. While crude oil's sharp drop should theoretically pass through to PTA, MEG, and ultimately polyester, weak downstream demand has disrupted this transmission. Polyester plants are reluctant to cut prices aggressively, and weavers are reluctant to buy, creating a temporary price standoff. However, there are signs of a turning point. With the Strait of Hormuz shipping channel fully reopened, global crude and commodity trade is normalizing. Economic recovery in several overseas economies could boost international textile consumption. For China's textile export market, incremental export orders may partially offset domestic weakness, alleviating downward pressure on polyester filament yarn.
In the short term, the weak supply-demand and high spread pattern will persist. The tug-of-war between upstream and downstream will continue to dominate market dynamics.