Crude oil has fallen back to levels seen before the escalation in the Middle East, yet polyester filament yarn prices remain nearly 1,000 yuan per ton higher than pre-crisis levels. This divergence is not a market failure but a fragile equilibrium reached after both upstream and downstream players calculated their own interests.
On June 24, WTI crude oil futures briefly dipped below $70 per barrel, returning to the price range before the recent Middle East tensions. Although prices rebounded slightly on June 25, they hovered around $70 again on June 26. Meanwhile, polyester filament yarn quotes were still about 1,000 yuan/ton above pre-crisis levels, creating a clear premium.
Raw materials have returned to baseline, why hasn't polyester filament followed?
PTA and MEG futures have essentially fallen back to pre-rally levels. By cost logic, polyester filament should have corrected in tandem. However, polyester plants have opted for small price cuts of 50-150 yuan/ton rather than aggressive reductions.
The reason lies in inventory costs. According to industry data, POY plant inventories stand at around 30 days, FDY at about 35.7 days, and DTY at 41.8 days. These inventories were produced when oil prices were high. A sharp price cut would turn paper losses into realized losses. For polyester plants, the more rational strategy is to maintain low operating rates and slowly destock rather than cut prices to chase volume.
Capacity utilization for direct-spun polyester filament stood at 73.81% on June 24, up only 0.29% from the previous week, yet still near a three-year low. Low operating rates themselves limit supply, giving polyester plants little urgency to cut prices.
Weavers adopt a 'buy only when necessary' stance, stalemate deepens
The healthy cash margin on polyester filament signals to weavers that prices are likely to fall further. If they are producing for inventory only, delaying purchases by a month could save hundreds or even thousands of yuan per ton on raw materials, with no difference in the final product. Consequently, weavers have adopted a 'buy only when necessary' approach, limiting purchases to confirmed orders.
This wait-and-see attitude has suppressed actual transaction volumes. The price cuts offered by polyester plants remain far from weavers' expectations, locking both sides in a pricing stalemate.
Weak domestic demand is the root cause; exports may break the deadlock
The core driver of the divergence in the polyester chain is weak supply-demand dynamics and insufficient domestic demand. This summer's unusually cool weather has delayed the seasonal surge in sun-protective clothing demand, further undermining end-consumer support.
However, external conditions are shifting. With the Strait of Hormuz shipping channel fully reopened, global crude oil and commodity trade flows are normalizing. Multiple overseas economies are accelerating their recovery, which is expected to boost international textile consumption. Increased export orders could partially offset domestic demand weakness and relieve downward pressure on the polyester filament market.
Short-term pattern persists, but the price gap must eventually close
In the near term, the weak supply-demand and high-price-gap pattern in the polyester chain will continue. Polyester plants will not proactively break the current pricing system, while weavers will wait for lower entry points.
But the price gap cannot persist indefinitely. If export orders pick up or seasonal demand finally materializes, downstream purchasing could accelerate suddenly, quickly relieving inventory pressure on polyester plants. Conversely, if demand remains sluggish, the cash margin advantage of polyester plants will gradually erode as high-cost inventories age, eventually forcing price concessions.