International crude oil prices have fallen back to levels seen before the recent escalation in the Middle East, yet polyester filament yarn (POY/FDY/DTY) prices remain nearly 1,000 yuan per ton higher. On June 24, WTI crude briefly dipped below $70, and despite a minor rebound on geopolitical news the next day, it hovered near $70 again on June 26. This price gap has become the central point of contention in the textile raw material market.
Upstream crude returns to baseline, why is polyester yarn lagging?
In theory, crude oil is the direct cost driver for PTA and MEG. As oil retreated, PTA and MEG futures have essentially fallen back to pre-rally levels, meaning cost support for polyester yarn should have weakened significantly. However, industry data shows that actual polyester yarn prices remain about 1,000 yuan/ton above pre-crisis levels.
This discrepancy stems from deliberate 'price management' by polyester producers. According to Longzhong data, on June 24, the operating rate of domestic direct-spun polyester filament yarn plants was 73.81%, up only 0.29% from the previous week. Although this rate is at a three-year low, mills have not opted for aggressive price cuts. The reason: their current inventory was produced at higher costs—POY inventory stands at 30 days, FDY at 35.7 days, and DTY at 41.8 days. A sharp price cut would immediately turn paper gains into realized losses. With low operating rates, there is no urgent need to offload inventory, so mills prefer 'slow price cuts, slow sales.'
Weavers adopt a 'buy only when necessary' stance
In contrast, weaving mills are extremely cautious. The high cash margin on polyester yarn signals to weavers that there is significant room for prices to fall. For production that is not backed by confirmed orders, delaying raw material purchase by a month could mean a cost difference of several hundred yuan per ton, while the final fabric quality remains unchanged.
This expectation has pushed weavers into a 'buy only when necessary' mode. Weak end-user demand, combined with expectations of further price declines, has slowed downstream procurement. The market is characterized by a clear supply-demand imbalance, with weak domestic demand being the root cause of the chain's divergence.
Abnormal weather and export variables
Summer is typically the peak season for sun-protection fabrics, but this year's unusually cool weather—with no sustained heatwave approaching July—has delayed the start of related demand. This seasonal shortfall further weakens short-term polyester yarn consumption.
However, not all signals are negative. With the full reopening of the Strait of Hormuz shipping channel, global crude and commodity trade is normalizing. Several overseas economies are accelerating their recovery, which could boost international textile demand. From an export perspective, subsequent order growth may partially offset domestic weakness, providing a floor for polyester yarn prices.
Standoff likely to persist short-term
In summary, the structural contradiction of 'weak supply-demand, high price spreads' in the polyester chain is unlikely to resolve quickly. Upstream mills are trading time for space, balancing inventory costs against cash flow, while downstream weavers wait on the sidelines, anticipating price drops. This tug-of-war will dominate polyester yarn market trends in the coming weeks.
For market participants, the deadlock may be broken by two forces: a trend reversal in crude oil that resets cost expectations, or a surprise uptick in end-demand (especially export orders) that forces weavers to restock. Until then, polyester yarn prices are likely to converge slowly toward cost levels in a narrow range.