Oil has returned to its pre-crisis level, but polyester filament yarn prices are still carrying a thousand-yuan premium. On June 24, WTI crude oil futures briefly dipped below $70, retreating to levels seen before the escalation of the Middle East situation. Although a modest rebound occurred on the 25th due to geopolitical news, prices hovered around $70 again on the 26th. Meanwhile, polyester filament yarn prices remain nearly 1,000 yuan per ton higher than before the recent surge. This gap is not accidental—it reflects a structural contradiction within the polyester supply chain.
Oil's Return and High Cash Flow in Polyester
The rapid decline in crude oil directly pulled down the futures prices of PTA and MEG, both of which have essentially returned to pre-rally levels. However, the spot prices of polyester filament yarn have not followed suit, resulting in a notably high theoretical cash flow for producers. According to publicly available industry data, the operating rate of domestic direct-spun polyester filament units stood at only 73.81% on June 24, a near three-year low. This low utilization rate has, to some extent, supported the pricing power of polyester plants.
Polyester mills are not unwilling to cut prices—they simply cannot afford to do so aggressively. Inventory levels are high: POY stocks stand at around 30 days, FDY at 35.7 days, and DTY at a hefty 41.8 days. These inventories were produced when raw material costs were elevated. A sharp price cut now would turn paper losses into real ones. With low operating rates, mills face limited pressure to offload inventory and prefer a strategy of gradual price reductions.
Upstream-Downstream Game: Price Expectations Drive Buying Behavior
For weaving mills, the current high cash flow in polyester filament signals significant room for future price declines. Except for confirmed orders, weavers have essentially adopted a "buy only when necessary" stance. Delaying purchases by a month could save hundreds or even thousands of yuan per ton of raw material, while the final fabric value remains unchanged. This expectation has intensified procurement delays, further suppressing market transactions.
On June 24, some polyester mills reduced filament yarn prices by 50–150 yuan per ton, but the cuts fell far short of weavers' expectations. The essence of this game: polyester mills use cash flow to buy time, while weavers use time to bargain for lower prices. Both sides are waiting for the other to blink first.
Weak Domestic Demand vs. Recovering Exports
The fundamental driver of this supply chain divergence is a supply-demand imbalance, with weak domestic demand at its core. Summer is typically the peak season for sun-protection fabrics, but unusually cool weather this year has delayed the seasonal uptick well into late June. However, positive signals are emerging from international markets: with the full reopening of the Strait of Hormuz shipping channel, global crude oil and commodity trade is gradually normalizing. Several overseas economies are accelerating their recovery, which is expected to boost demand for textile products.
For Chinese textile exporters, incremental export orders may partially offset the pressure from weak domestic demand, providing some relief for the polyester filament market. Nevertheless, in the short term, the pattern of weak supply-demand fundamentals and high price spreads will persist, with upstream-downstream bargaining continuing to dominate market dynamics.