After a deep correction, the polyester chain saw a second consecutive trading day rebound on June 30, with PX closing up 0.87% and PTA up 0.91%. Does this signal a market bottom? Looking at supply-demand structures across the chain, the rebound is driven by both easing geopolitical factors triggering restocking expectations and proactive supply contraction upstream, but the weak midstream and downstream conditions remain fundamentally unchanged.
Upstream Supply: Geopolitical Premium Fading and PX Restart Pressure
Navigation conditions in the Strait of Hormuz are improving. According to industry public data, current transit volume has recovered to about 75% of pre-conflict levels, easing global shipping tensions. However, shipping insurance premiums remain high, indicating market pricing of geopolitical risk is not fully cleared. Notably, strategic petroleum reserves in many countries are at low levels, theoretically supporting strong restocking demand, providing underlying support for PX prices.
PX has shown relative strength in this rebound. Its price did not break below pre-conflict levels during the correction, reflecting tight supply fundamentals. As Strait navigation expectations gradually materialize, PX units previously shut down for maintenance may restart early, adding future supply but potentially capping further price upside.
Midstream PTA: Maintenance Wave Creates De-stocking Window
The PTA industry launched an unprecedented wave of concentrated maintenance starting in April. Shutdowns and reduced operations involved over 22 million tons of capacity, more than 20% of total domestic capacity. This proactive contraction pushed PTA daily capacity utilization to about 60%, the lowest since October 2021. The direct effect has been declining social inventories, with the industry entering a de-stocking phase.
Timing-wise, this maintenance wave overlapped with the off-season for end-user consumption, preventing supply-demand conflicts from escalating. However, the concentration of maintenance also implies synchronized restarts. Once PTA plants resume production en masse, supply pressure will return quickly, challenging the de-stocking process. The current PTA price rebound is more a correction of excessive pessimism than a demand-driven reversal.
Downstream Polyester: Fragile Balance of Profit Divergence and Order Recovery
Overall profitability in the polyester sector is acceptable, but internal structure is divergent. Except for polyester chips and polyester filament DTY, other products have profit margins of 200-300 yuan per ton, meaning most polyester firms can maintain operations, but margins are not generous.
As of June 18, the average operating rate in domestic polyester industry was 80.19%, down 8.44 percentage points year-on-year, corresponding to weekly PTA demand of about 1.34 million tons. Meanwhile, the weaving industry operating rate was only 57%, down 13 percentage points year-on-year. The contrast between upstream rate declines and sharper downstream weakness reflects weak end-user demand transmitting upward.
Recent orders show signs of improvement, likely downstream restocking at low prices rather than genuine consumption recovery. Polyester filament inventories continue to rise, indicating weak end-user purchasing willingness and no relief in inventory pressure. The current market presents a pattern of "tightening upstream, compressing midstream, weak recovery downstream." The sustainability of the rebound depends on whether downstream can truly absorb existing inventories.