International crude oil fell below $70 per barrel on June 24, returning to pre-Middle East crisis levels. Despite a slight rebound on June 25 due to geopolitical fluctuations, oil hovered around $70 again on June 26. A striking contrast for the textile industry: polyester filament yarn prices remain nearly 1,000 yuan per ton higher than before the recent surge.
This price gap is not a short-term anomaly but a concentrated reflection of pricing power struggles across the supply chain. Crude oil, as the upstream source for polyester, should normally transmit price changes quickly to the polyester sector. However, while PTA and ethylene glycol futures have essentially returned to their starting points, polyester yarn prices have not followed suit.
High Cash Flow, Stalemate
According to Longzhong data, on June 24, the capacity utilization rate for domestic direct-spun polyester filament yarn was 73.81%, up 0.29% from the previous week. While seemingly stable, this rate is at a three-year low, indicating that polyester mills are actively controlling inventory through production cuts. Current inventory levels stand at 30 days for POY, 35.7 days for FDY, and 41.8 days for DTY—high inventory means locked-in production costs.
Polyester mills face a paradox: despite attractive paper cash flow, price cuts would turn unrealized losses into real ones. Their preferred strategy is slow price reduction and slow sales. For weaving enterprises, the high cash flow of polyester yarn signals further downside potential. Unless they have urgent orders, they adopt a "buy only when necessary" approach, waiting for the cost savings from delayed purchases.
This psychological standoff between upstream and downstream has frozen the market into a "price anchoring" state.
Weak Demand, Structural Divide
Weak domestic demand is the core pain point. An unusually cool summer has delayed seasonal demand for sun-protective clothing, further suppressing weavers' purchasing intentions. Although polyester mills have cut production, inventory pressure has not eased substantially, while weavers are also reducing operating rates to hedge against raw material volatility.
However, not all is negative. With the full reopening of the Strait of Hormuz shipping lane, global crude oil and commodity trade is gradually normalizing. Economic recovery in multiple overseas economies is expected to boost international textile consumption demand. Future export order growth may partially offset domestic weakness, providing some support for the polyester yarn market.
Pricing Power Shift
This price gap reveals a deeper trend: pricing power in the polyester chain is shifting from upstream cost-driven to downstream demand-driven. In the past, crude oil fluctuations almost simultaneously affected polyester yarn prices. Now, mills can delay price declines through production cuts and inventory control, while weavers force price reductions by delaying purchases and compressing inventories.
This change demands new strategies for buyers and exporters.
For Buyers - Adopt a just-in-time procurement strategy with small batches and frequent orders to avoid large inventory positions. - Monitor inventory inflection points at polyester mills—when stocks begin to decline rapidly, price bottom signals may become clearer. - Consider negotiating floating price agreements with suppliers to share price risk.
For Exporters - With overseas demand recovery signals, consider front-loading orders but include raw material price adjustment clauses in contracts to hedge against domestic price drops. - Leverage the current high cash flow window of polyester mills to negotiate more flexible payment and delivery terms. - Monitor Middle East geopolitics and crude oil trends; if geopolitical risks resurface, polyester yarn prices may rebound quickly, so lock in costs for some forward orders in advance.
Overall, the weak supply-demand balance and high price gap in the polyester chain are likely to persist in the near term. The ongoing tug-of-war between upstream and downstream will continue to dominate market direction. The shift in pricing power means industry players need more agile strategies rather than simply following cost fluctuations.