International oil prices have returned to levels seen before the escalation of the Middle East crisis, yet the price of polyester filament yarn remains nearly 1,000 yuan per ton higher than before the conflict. On June 24, U.S. WTI crude futures briefly dipped below $70 per barrel, directly hitting the price line seen before the geopolitical tensions. Although oil rebounded slightly on June 25 due to renewed instability in the Middle East, it fell back to around $70 on June 26. Meanwhile, polyester filament yarn prices remain stubbornly high, creating a clear divergence from crude oil trends.
This price gap is not a market malfunction but the result of a tug-of-war between upstream and downstream players in the polyester chain. For weaving mills, the current high cash margins on polyester filament imply significant room for future price declines. If they purchase only to build inventory, the cost of raw materials could differ by hundreds or even thousands of yuan per ton within a month, while the finished products would sell at the same price. As a result, the market has entered a 'buy-only-when-necessary' wait-and-see mode.
Low Operating Rates and the 'Slow Reduction' Strategy of Polyester Plants
Polyester plants do have room to cut prices, but they are unwilling to do so quickly. According to Longzhong data, the operating rate of direct-spun polyester filament yarn capacity in China stood at only 73.81% on June 24, up just 0.29% from the previous week. However, this level remains near a three-year low. The low operating rate has effectively controlled physical inventories: POY inventory stands at about 30 days, FDY at 35.7 days, and DTY at 41.8 days.
The production costs of these inventories are not low. If polyester plants were to cut prices sharply now, they would convert paper-high cash margins into actual losses. Therefore, they have adopted a strategy of 'slow price cuts and slow sales', sacrificing shipment speed to maintain book profits. On June 24, some plants only reduced polyester filament prices by a modest 50-150 yuan per ton, far below the expectations of weaving mills.
Weak Demand and Sluggish Domestic Consumption Are Root Causes
The fundamental reason for the divergence in the polyester chain is the combination of ample supply and weak demand, particularly in the domestic market. This year's unusually cool summer has delayed the peak season for summer fabrics such as sun-protective clothing, further dragging down actual consumption of polyester filament. Weak domestic demand has become the core pain point of the polyester chain, leaving weaving mills with little incentive to build inventory, even when raw material prices ease.
However, not all signals are negative. With the full reopening of the Strait of Hormuz for shipping, global crude oil and commodity trade are gradually recovering. Several overseas economies are accelerating their recovery, which could boost international demand for textile products and support China's textile exports. Incremental export orders may partially offset the pressure from weak domestic demand and alleviate downward risks in the polyester filament market.
Short-Term Stalemate Likely to Persist
In the near term, the pattern of 'weak supply-demand and high price spreads' in the polyester chain is unlikely to change fundamentally. Polyester plants are maintaining high cash margins under low operating rates, while weaving mills remain on the sidelines amid price expectations. The tug-of-war between upstream and downstream will continue to dominate market trends. Industry participants should closely monitor two variables: the further direction of crude oil prices and the actual landing of overseas orders.