On July 1, the polyester staple fiber (PSF) spot market in Jiangsu showed a significant correction, with the benchmark price dropping 55 yuan from the previous trading day to 7,200 yuan/ton. Morning negotiations saw the range widen to 7,150-7,250 yuan/ton, with some low-end cargoes hitting near 6,950 yuan/ton. This price level has already breached the cash cost line for many PSF producers, prompting a reassessment of profit distribution across the polyester chain.
Dual Pressure from Costs and Demand
The core driver behind this PSF price decline is the weakening cost support. The ongoing recovery of strait shipping capacity, combined with a drop in international crude oil prices, directly undermined the cost support for polyester raw materials. Meanwhile, scheduled spring maintenance for PTA and MEG is being implemented, theoretically tightening supply, but this positive factor is being offset by simultaneous output cuts in the polyester sector.
Polyester output cuts are not a short-term phenomenon. According to industry public data, the composite operating rate in Jiangsu and Zhejiang has fallen from 92% to around 87% since June, with reductions across filament, staple fiber, and chips. This means that while upstream raw material supply is contracting due to maintenance, downstream demand is contracting even faster, tilting the supply-demand balance in favor of buyers.
Transmission Effects in Industrial Clusters
Jiangsu, as China's largest PSF production base, sets a benchmark for the entire market. This price drop will directly transmit to downstream weaving and home textile clusters in Shengze, Nantong, and Shaoxing. For spinning mills using PSF, lower raw material costs theoretically benefit profit recovery, but only if downstream orders can absorb the output.
The reality is less optimistic. Checks by the Textile Circle editorial team with multiple weaving mills in Jiangsu and Zhejiang reveal that grey fabric inventories have risen to over 35 days, and end-brand apparel restocking intentions remain cautious. The PSF price cut has not immediately translated into higher procurement volumes; instead, it has deepened market wait-and-see sentiment, with buyers expecting further downside and choosing to destock rather than restock.
Outlook Amid Absence of New Catalysts
From both supply and demand sides, the PSF market lacks substantial upward catalysts in the near term. On the cost side, crude oil prices face heightened volatility due to global macroeconomic uncertainty, making stable support unlikely. On the supply side, the reduction from raw material maintenance is insufficient to reverse the overall loose balance. On the demand side, polyester output cuts continue, with no clear signs of recovery in end-consumption.
Notably, current PSF prices have fallen below the full-cost line for some high-cost plants, which will force smaller capacity to further reduce runs or exit the market. Historical experience suggests that such a 'price-for-volume' shakeout typically takes 2-3 months to complete supply-demand rebalancing. During this period, the price floor may be tested repeatedly in the 6,800-7,100 yuan/ton range.