The crude oil market witnessed a dramatic moment on June 24, as WTI crude oil futures briefly dipped below $70 per barrel, returning to pre-Middle East crisis levels. Although a rebound occurred the next day due to geopolitical fluctuations, oil prices again hovered near the $70 mark on June 26. In stark contrast to oil's 'return to origin,' polyester filament yarn prices remain nearly 1,000 yuan per ton higher than before the crisis. This price gap has become a heavy weight in the game between upstream and downstream players in the textile chain.
The Price Gap Mystery: Why Has Cost Transmission Failed?
Conventional logic suggests that crude oil price fluctuations, as the most upstream raw material in the polyester chain, should quickly pass through to downstream products. However, this time the transmission has encountered obvious 'blockage.' In the futures market, PTA and MEG prices have essentially fallen back to pre-crisis levels, yet spot polyester yarn prices remain stubbornly high. Industry public data shows that current POY factory inventory stands at about 30 days, FDY at about 35.7 days, and DTY as high as 41.8 days, all at elevated levels. These inventories were produced during the high-oil-price period, with costs far above current spot prices. For polyester plants, a sharp price cut following crude oil would turn paper profits into real losses. With operating rates already at three-year lows (domestic direct-spun polyester filament yarn capacity utilization was only 73.81% on June 24), plants face little pressure to offload inventory, preferring a 'slow price reduction, slow sales' strategy to buy time.
Downstream 'Buy Only When Necessary': A Wait-and-See Stance Driven by Expectations
Mirroring the upstream 'slow reduction' strategy, downstream weaving mills have fallen into a wait-and-see mode anchored by price expectations. For weaving mills, the current high cash flow of polyester yarn (i.e., the high gross margin between raw material cost and selling price) itself signals a strong likelihood of future price cuts. Without urgent order deliveries, buying raw materials now versus delaying a month could mean a cost difference of hundreds or even thousands of yuan per ton, yet the fabric output value remains the same. This expectation has triggered a classic 'buy on rising, not on falling' reverse cycle—the more prices drop, the less people buy. The Textile Circle Editorial Department learned from market research that many weaving mills in Jiangsu and Zhejiang have explicitly shortened their raw material purchase cycles to a minimum, maintaining only essential production.
Weak Demand Amid Ample Supply: Domestic Softness and a Weather 'Black Swan'
Beneath the surface of price gap games, the core contradiction lies in supply-demand imbalance. Public consumption data from the National Bureau of Statistics shows that domestic textile end-demand recovery has fallen short of expectations. A typical example: summer is normally the peak season for sun-protective fabric demand, but this June, temperatures across much of China were unusually low, with some regions experiencing a 'cool summer,' directly delaying related fabric orders. This weather factor, combined with overall domestic demand weakness, has left the downstream polyester chain with severely insufficient 'digestion capacity.' Although polyester plants have proactively reduced operating rates, inventory destocking remains slow, and the supply-demand scissors gap continues to widen.
Can the Export Window Open?
The market is not without bright spots. With the full reopening of shipping lanes through the Strait of Hormuz, global crude oil and commodity trade order is gradually being restored, and economic recovery in multiple overseas economies is accelerating. This trend is expected to boost international textile consumption demand, providing some support for China's textile export market. The Textile Circle Editorial Department notes that recently, inquiry volumes from some Southeast Asian and Middle Eastern markets have picked up. If export orders can gain traction in the coming months, they will partially offset the pressure from weak domestic demand, alleviating downside risks in the polyester yarn market. However, whether export order increments can fully compensate for the domestic demand gap remains to be seen, pending actual performance in the traditional peak third-quarter season.