The textile market is undergoing a delicate supply-demand standoff. On July 2, industry monitoring data showed that the average sales-to-production ratio of polyester filament sample enterprises was only 31.7%, down 4.1 percentage points from the previous day. This means that for every 100 tons of polyester filament produced, fewer than 32 tons were absorbed by the market. Amid high cash flow, downstream users' wait-and-see attitude and resistance are pushing the chemical fiber supply chain to a critical turning point.
Signals Behind the Data
The sales-to-production ratio is a core indicator of market activity. A ratio of 31.7% is far below the healthy level (typically above 70%). Public data from 25 sample enterprises reveals that two reported 0% sales, and over half recorded below 30%, with only one reaching 70%. This distribution points to a systemic demand contraction rather than isolated corporate issues.
Persistently high cash flow in polyester filament is a key driver. When upstream raw material costs are elevated and product profit margins are ample, producers tend to maintain high prices. However, downstream weaving and garment users, facing high-priced raw materials, show significantly weakened purchasing willingness. This price tug-of-war between upstream and downstream is causing a sharp decline in the sales ratio.
Failed Cost Transmission and Inventory Pressure
Under normal conditions, cost fluctuations in the chemical fiber chain transmit from crude oil to PX, PTA, MEG, then to polyester filament, and finally to fabric and garment prices. However, currently, crude oil prices lack upward momentum due to repeated Middle East tensions. Polyester filament producers, with healthy cash flow, are reluctant to cut prices, causing a break in the cost transmission chain.
Downstream users' resistance is not unfounded. When upstream quotations invert with their own order prices, weaving mills prefer to reduce operating rates and consume existing inventory rather than purchasing at high prices. Once this strategic wait-and-see behavior becomes collective, it quickly depresses the sales ratio. A sustained low ratio inevitably leads to passive accumulation of polyester filament social inventory.
Inventory pressure will eventually force producers to adjust strategies. Historical experience shows that when the sales ratio remains below 40% for a week, some producers may launch price promotions or implement production cuts for maintenance. If this trend continues, polyester filament prices may soften in mid-to-late July, affecting procurement rhythms for PTA and MEG.
Regional and Export Implications
From a regional perspective, inventory levels in major polyester filament production areas like Zhejiang and Jiangsu are rising. Weaving enterprises in Shengze, Changxing, and Xiaoshan report significantly reduced purchasing frequency, adopting a 'buy-as-needed' approach and avoiding long-term contracts. While this short-term behavior hedges price risk, it increases supply chain uncertainty.
The impact on foreign trade is equally notable. Southeast Asian textile and garment orders are recovering, but if China's polyester filament export offers face pressure due to domestic inventory, export margins may shrink. Additionally, with potential RMB exchange rate fluctuations and high raw material costs, some foreign trade firms may face pricing difficulties for forward orders.
Practical Recommendations
For Buyers - Focus on just-in-time replenishment in the short term, avoiding stockpiling. Closely monitor inventory digestion speed and planned plant maintenance. - Consider negotiating floating price clauses with suppliers to share price risk. - Track crude oil and PTA futures trends. If oil prices continue to weaken, consider phased purchases after price corrections.
For Foreign Trade Firms - Build a 3%-5% price flexibility buffer into export quotes to accommodate potential domestic price cuts and international buyer pressure. - Lock in raw material costs for forward orders using futures or forward contracts to hedge price volatility. - Monitor demand changes in Southeast Asian and South Asian markets. If domestic prices decline, intensify export marketing efforts opportunistically.
The current sales ratio data sounds an alarm. The upstream-downstream standoff in the chemical fiber chain will require one side to concede to break the deadlock. For industry participants, rather than passively waiting, proactive adjustments to inventory and pricing strategies are essential to find certainty amid volatility.