On July 1, the average sales-to-production ratio of polyester filament yarn sample enterprises fell to 35.8%, down 3 percentage points from the previous trading day. This means less than 36 tons out of every 100 tons produced were sold, leaving over 60% as inventory. Market transactions were sluggish, with buyers mostly on the sidelines. The supply-demand imbalance in the chemical fiber chain is now transmitting from upstream raw materials to downstream weaving sectors.
Behind the Sales Data: Industry Signals
The ratio varied widely across samples: some companies reported zero sales, while the highest reached only 85%. Most firms hovered between 20% and 40%, reflecting weak purchasing intent across the board. Polyester filament yarn producers adjusted their list prices but kept actual transaction prices stable, fearing that aggressive cuts would trigger deeper buyer hesitation and create a 'lower prices, lower demand' spiral.
Historically, 35.8% is near the lowest level for the same period in the past three years. While June-July is traditionally a low season for textiles, such a low ratio goes beyond seasonal factors, pointing to a structural contraction in downstream demand.
Cost vs. Demand: A Stalemate
Key raw materials PTA and MEG show divergent price trends, but overall costs remain high. Crude oil, amid repeated Middle East tensions, has lost upward momentum, with Brent hovering at $75-80/barrel, weakening cost support for the polyester chain. However, fixed costs like depreciation, labor, and energy for polyester producers haven't fallen in tandem, preventing them from lowering prices significantly.
Downstream users take the opposite stance. Facing sluggish growth in garment orders—especially as European and American markets are still in a destocking cycle—weaving mills generally adopt a 'produce to order' strategy, being extremely cautious in raw material purchases. Price resistance was evident on July 1: even without price hikes, buyers chose to wait rather than stock up. This pricing tug-of-war shows no sign of resolution in the near term.
Ripple Effects in Textile Clusters
Major textile clusters like Keqiao, Shengsze, and Nantong are squeezed by high raw material inventories and low finished product margins. In Shengsze, some weaving mills have reduced operating rates from over 80% in Q1 to around 60%, with more maintenance shutdowns. In Keqiao, small and medium fabric traders report 15%-20% year-on-year declines in new orders for June, with many inquiries but few actual deals.
Polyester filament yarn, as the most widely used chemical fiber in textiles, serves as a leading indicator of industry health. If the July 1 data persists, Q3 may force upstream polyester plants to cut production to protect prices, which would in turn affect PTA and MEG demand expectations, creating a negative feedback loop: raw material price drops lead to polyester yarn price drops, leading to more downstream waiting.
Practical Recommendations
For Buyers - Avoid large-scale stockpiling now; maintain 15-20 days of safety stock to handle sudden replenishment needs. - Monitor polyester filament yarn plants' maintenance schedules. If production cuts expand by mid-July, lock in orders at low prices in batches. - Negotiate floating price clauses with suppliers to partially transfer raw material price risk upstream.
For Exporters - European clients increasingly demand eco-certifications for polyester fabrics. Offer GRS (Global Recycled Standard) certified products to differentiate. - For Southeast Asian orders, track local currency fluctuations and ocean freight costs to avoid unexpected losses. - Use current low domestic raw material prices to finalize long-term contracts with overseas buyers for H2, locking in profit margins.
Overall, the July 1 sales data is a concentrated release of supply-demand imbalance. A quick rebound is unlikely, but history shows that when the ratio stays below 40% for weeks and factory inventory exceeds 20 days, a bottom is often forming. For companies with capital, this could be a chance for contrarian positioning.