On June 24, WTI crude oil futures briefly fell below $70 per barrel, returning to levels seen before the escalation of the Middle East crisis. Although prices rebounded slightly on June 25 due to renewed geopolitical tensions, they hovered near $70 again on June 26, signaling a more rational pricing of supply risks.
In stark contrast, polyester filament yarn (PFY) prices remain nearly 1,000 yuan per ton higher than before the crude oil rally began. While PTA and MEG futures have largely erased their gains, spot PFY prices have not followed suit, creating a price gap that is intensifying bargaining across the textile chain.
The Logic Behind the Price Gap
Polyester plants are not unwilling to cut prices; they simply cannot do so quickly. Current inventory levels stand at 30 days for POY, 35.7 days for FDY, and 41.8 days for DTY, with most of these stocks produced using high-cost raw materials purchased during the earlier oil-price surge. A sharp price cut would convert paper losses into real losses, something no major polyester producer wants to risk.
Capacity utilization for direct-spun PFY stood at 73.81% on June 24, up only 0.29% week-on-week, but this remains near a three-year low. Low operating rates help control inventory build-up, but they also mean plants have no urgent need to offload stocks—they can afford to sell slowly and cut prices gradually, buying time to digest high-cost inventory.
For weaving mills, the high cash margin on PFY is a bearish signal. If they buy raw materials now, prices could fall hundreds of yuan per ton within a month, yet the finished fabric prices won't reflect the higher input cost. As a result, most mills have adopted a 'buy only when necessary' stance, holding off purchases unless they have firm orders to fulfill.
Root Cause: Demand Weakness
The core driver of the price divergence is not geopolitics but persistently weak domestic textile demand. The summer season is typically peak time for sun-protection fabrics, but cooler-than-usual weather has delayed consumer demand, leading to insufficient orders for weaving mills and negative feedback upstream.
On the export front, the full reopening of the Strait of Hormuz shipping channel has restored global crude and commodity trade flows, and several overseas economies are accelerating recovery. This provides some support for Chinese textile exports, but it remains uncertain whether export orders can fully offset domestic weakness. The high inventory levels suggest the export boost has yet to materialize significantly.
Short-Term Standoff to Persist
In the near term, the polyester chain will likely remain stuck in a 'weak demand, high margin' stalemate. Plants are reluctant to cut prices, and mills are unwilling to restock. The outcome hinges on two variables: whether crude oil stabilizes or falls further around $70, and whether end-use textile demand rebounds in July-August.
For buyers, the current market favors lengthening procurement cycles to reduce raw material cost risk. For exporters, the recovery signals from overseas markets merit attention, but price volatility in inputs must be hedged in quotations.