On June 24, the average sales-to-production ratio of sampled polyester filament yarn enterprises was only 45.6%, up 11.4 percentage points from the previous trading day. While this represents a slight improvement, the figure remains in a dangerous zone—industry standards generally consider ratios below 60% as indicative of rapid inventory accumulation.
What makes this situation more concerning is that the modest uptick was not driven by genuine demand recovery but by factories resorting to price cuts and promotions to stimulate sales. Several polyester filament yarn mills lowered their quotes in an attempt to boost volume. Data from individual enterprises show extreme divergence: the highest ratio reached 150%, while the lowest was only 10%. This indicates that the market has not formed a consensus buying pattern; only a few firms managed to achieve limited sales through deep discounts.
The Logic Behind Low Sales Ratios
Polyester filament yarn is a core upstream raw material in the textile supply chain, and its sales-to-production ratio directly reflects downstream weaving activity and order conditions. The current 45.6% ratio, when placed in the industry's historical cycle, represents a classic "difficult destocking" phase. Under normal conditions, a healthy ratio falls between 70% and 80%; below 60%, upstream inventory pressure begins to transmit to prices.
From an industrial cluster perspective, major weaving hubs such as Shengze, Changxing, and Xiaoshan have seen declining operating rates since the second quarter. Slower order placement by apparel brands has led to high grey fabric inventories, weakening weaving mills' willingness to purchase raw materials. This "demand collapse" is not a short-term fluctuation but the cumulative result of sluggish end-consumer demand transmitting upward through the chain.
Why Price Cuts Fail to Stimulate Demand
Factory price cuts theoretically encourage downstream restocking, but their effectiveness is limited in the current environment for three reasons:
- Insufficient end orders: Even with lower raw material prices, weaving mills face the risk of unsold grey fabric, making them prefer to wait rather than stock up.
- Working capital pressure: Weaving mills themselves face tight cash flow; without confirmed orders, small price reductions do not justify increasing inventory.
- Pessimistic expectations: The market broadly anticipates further price declines for polyester filament yarn, and the psychology of "buying on rising prices, not falling ones" further suppresses purchasing willingness.
Data shows that only two sampled enterprises achieved a ratio above 100% on that day, with most hovering between 30% and 60%, and seven firms below 30%. This distribution pattern suggests that price cuts did not generate a broad "volume-for-price" effect but instead allowed a few firms to absorb the limited orders available.
Impact on the Upstream and Downstream Chain
For upstream raw material producers, persistently low sales ratios mean that inventory pressure will further transmit to PTA and MEG segments. If polyester filament yarn factories are forced to cut production, the polyester sector's operating rate will also decline, affecting the PX-naphtha chain balance—a cascading negative feedback loop.
For downstream weaving mills, current raw material prices are relatively low, which theoretically helps reduce production costs. However, this benefit is conditional on having orders. Without improved end demand, cheap raw materials only accelerate the depreciation of grey fabric inventories rather than improve margins.
For traders and intermediaries, the current phase favors caution over speculation. The inventory cycle is in a downward channel, making hoarding far riskier than rewarding.
Practical Recommendations
For Buyers - Strictly control raw material inventory levels, maintaining 15-20 days of supply to avoid inventory write-downs from falling prices. - Monitor changes in weaving mill operating rates. If rates in Shengze or Changxing decline further, consider postponing procurement. - Prioritize suppliers with higher sales ratios and stable cash flow to avoid delivery delays due to upstream production cuts.
For Foreign Trade Firms - Watch for signs of overseas order recovery, especially direct demand for polyester filament yarn from Southeast Asia. If export orders weaken, domestic supply-demand tensions will intensify. - Lock in forward contracts at current low prices, but include price protection clauses to guard against further market declines. - Strengthen hedging against exchange rate fluctuations, as the yuan's movement affects export competitiveness and indirectly impacts global supply-demand dynamics for chemical fiber raw materials.
The 45.6% sales-to-production ratio for polyester filament yarn is not an isolated data point but a signal that the entire textile supply chain is entering an adjustment phase. When price cuts fail to stimulate demand, the market requires deeper supply-side adjustments to restore balance.