Polyester mills' promotional tactics have lost their edge. The latest round of price cuts in late June saw daily sales rates hover around 70%, plummeting to 30% the next day. Compared to previous promotions that at least achieved a one-day spike above 100%, market sentiment has shifted from wait-and-see to outright apathy. Downstream weaving mills no longer respond to discounts, adopting a strategy of minimal spot purchases and virtually no bulk stockpiling.
The Ceiling on Costs and the Floor on Demand
Support from the raw material side is systematically weakening. With the reopening of the Strait of Hormuz and the gradual departure of stranded tankers, the short-term premium from Middle East energy disruptions is fading rapidly. Morgan Stanley has once again lowered its oil price forecast within two weeks, predicting that spot Brent crude will average $75 per barrel in Q3 and Q4. This means the polyester chain is unlikely to see the kind of explosive price surges—such as a 50% jump in days—that occurred earlier this year.
Contrasting with this cost ceiling is the floor on demand. Downstream weaving mills have entered a mode of extreme rationality: no orders, no production. Squeezed by two years of compressed margins, these enterprises have very limited flexibility, and operating rates show little elasticity. On the fabric side, the breakeven point between existing inventory and fresh greige goods remains under negotiation, with price elasticity virtually absent.
High Inventories and the Discount Dilemma
Polyester mills are trapped in a dual inventory pressure. Industry data shows that inventory days for POY, FDY, and DTY stand at 30, 35.7, and 41.8 days respectively, and these figures continue to climb. While mills are eager to destock through discounts, the high cost of earlier raw material purchases limits their room to cut prices. If downstream players remain on the sidelines, polyester filament prices may drift lower, or mills may be forced into a more aggressive clearance sale.
This 'promotion fatigue' reflects a deep divergence in price expectations along the chain. Upstream players want to move volume by cutting prices, while downstream buyers believe there is still room for costs to fall and are holding onto cash. The stalemate will only break when one side can no longer bear the pressure.
Waiting for a Catalyst: Can Low Inventories Trigger Elasticity?
The textile market is not entirely without bright spots. One frequently cited potential driver is summer sun-protective clothing. However, persistent heavy rainfall across China has delayed the arrival of high temperatures, pushing back demand for such garments. In the short term, the market is waiting for a blockbuster product—similar to last year's 'New Chinese Style' fabric—to reignite demand.
From a broader perspective, production capacity expansion in the first half of the year has been restrained, and both upstream and downstream players have maintained cautious stockpiling. As a result, current social inventories are at relatively low levels compared to the past two years. This means that once demand shows a substantive recovery in the second half, the market could experience a short-term supply-demand mismatch, restoring price elasticity in fabrics. This combination of low inventories and a demand pulse is the most noteworthy potential catalyst for the current cycle.