International crude oil has fallen back to pre-crisis levels, yet polyester filament yarn prices remain nearly 1,000 yuan per ton higher than before the conflict began—a rare anomaly that has pushed the polyester chain into deep strategic standoff.
On June 24, WTI crude briefly dropped below $70/barrel, and despite a slight rebound on June 25 due to renewed Middle East tensions, it hovered near $70 again on June 26. Meanwhile, polyester filament yarn prices remain about 1,000 yuan/ton above pre-crisis levels, while PTA and MEG futures have already retraced all their gains.
The Dilemma of High Margins
On paper, polyester filament yarn currently enjoys substantial cash margins. However, this high spread is not driven by strong demand but by a mismatch between cost and inventory structure.
Polyester mills' raw material inventory costs are far above current spot prices. Data shows POY inventory stands at about 30 days, FDY at 35.7 days, and DTY as high as 41.8 days. These inventories were produced during the high-oil-price period; any price cut would immediately turn paper losses into realized losses. Therefore, mills prefer to maintain low operating rates and destock slowly rather than slash prices.
According to Longzhong data, the domestic direct-spinning polyester filament yarn capacity utilization rate was only 73.81% on June 24, up a mere 0.29% from the previous week but still at a three-year low. Low operating rates mean mills have no urgent need to offload large volumes, giving them the confidence to sell slowly.
Weavers' Wait-and-See Approach
For weaving enterprises, the high cash margin on polyester yarn signals significant downside risk. The current spread of nearly 1,000 yuan/ton represents a potential cost swing within a single procurement cycle. Unless they have confirmed orders to fulfill, buying raw materials just for inventory could lead to losses of hundreds or even thousands of yuan per ton within a month.
This expectation has sharply curtailed downstream purchasing, creating a "no-buy-unless-necessary" mentality. Although mills' paper margins look attractive, actual transactions are sluggish, with price cuts limited to 50-150 yuan/ton—far below what downstream buyers expect.
Weak Demand as Root Cause
The fundamental driver of this divergence is insufficient domestic demand. In previous years, summer would kick off a peak season for sun-protective fabrics, but this year's unusually cool weather has delayed order placement. Meanwhile, the overall apparel market remains weak, keeping weaving mills' utilization rates low.
However, not all is bleak. With the Strait of Hormuz shipping lanes fully reopened, global crude and commodity trade order is gradually restoring. Several overseas economies are accelerating recovery, which could boost international textile consumption demand. Future export order increments may partially offset domestic weakness and ease downward pressure on polyester yarn.
Near-Term Outlook: Stalemate to Continue
In summary, the "weak supply-demand, high price spread" pattern in the polyester chain is unlikely to break in the near term. The tug-of-war between polyester mills and weavers will continue to dominate market dynamics. For downstream buyers, the key is to gauge mills' destocking pace and crude oil's further direction.