International crude oil futures fell below $70 per barrel this week, fully erasing the premium triggered by the latest Middle East tensions. Yet the market price of polyester filament yarn remains nearly 1,000 yuan per ton higher than before the conflict began. This persistent price gap is creating a rare tug-of-war across the textile supply chain.
Raw Materials Have Reset, Why Won't Polyester Follow
On the futures market, PTA and MEG prices have largely returned to their pre-crisis levels. By cost-pass-through logic, polyester filament should have followed suit. But as of June 26, polyester prices have only seen modest cuts of 50 to 150 yuan per ton, still far from pre-crisis levels.
The root cause lies in the cost structure of polyester plants’ inventories. Industry data shows current POY inventory at about 30 days, FDY at 35.7 days, and DTY as high as 41.8 days. These stocks were produced when raw material prices were high. A sharp price cut would turn paper losses into real ones. With capacity utilization at just 73.81%—a three-year low—polyester plants have little urgency to destock. They prefer a slow, controlled price decline.
Weaving Mills Hold Back, Waiting for Lower Prices
For downstream weaving mills, the high cash margin on polyester filament is itself a bearish signal. If raw materials have already fallen back to baseline, the generous profit margin on polyester suggests further downside is likely. Without urgent orders, buying now means taking on the risk of price depreciation.
This mindset has created a negative feedback loop. Weaving mills cut purchases, polyester plants see slower sales, and inventory pressure fails to ease. On the demand side, weak domestic consumption is the core issue. Unseasonably cool weather has delayed the start of seasonal summer fabric orders, further reducing mills’ incentive to restock.
Can External Tailwinds Break the Stalemate
Despite weak domestic demand, there are positive signs from overseas. The full reopening of the Strait of Hormuz shipping channel has stabilized global crude and commodity trade, and several overseas economies are accelerating their recovery. This could boost international textile demand and provide some support for China’s textile exports.
If export orders can partially offset domestic weakness, the supply-demand imbalance in the polyester filament market may ease. But this transmission takes time. In the near term, the pattern of weak demand and wide price spreads will persist.
Practical Advice
For Purchasers - Polyester prices still have room to fall. For non-urgent orders, continue to wait and buy in batches to average down costs. - Monitor polyester plant production cuts and crude oil trends. If oil stabilizes and polyester operating rates drop further, that could signal a floor.
For Exporters - With overseas demand expected to improve, consider locking in some forward raw material contracts, but avoid large bulk purchases. - Use the current wide price spread to negotiate price adjustment clauses with clients, sharing the risk of cost fluctuations.
This misalignment in the supply chain will not last forever. The stalemate will break when inventory costs force polyester plants to concede, or when downstream demand shows real improvement. Until then, cautious monitoring and flexible execution remain the most rational strategies.