Crude oil prices have returned to pre-conflict levels, but polyester filament yarn remains nearly 1,000 yuan/ton higher. This gap is driving a strategic standoff between polyester mills and fabric weavers.
Oil Reverts, Polyester Holds Firm
On June 24, WTI crude oil briefly fell below $70/barrel, back to levels before the Middle East tensions escalated. Although prices rebounded on June 25 due to geopolitical volatility, they hovered near $70 again on June 26. Yet polyester filament yarn prices remain nearly 1,000 yuan/ton higher than before the conflict.
From the futures perspective, PTA and MEG have already fallen back to pre-crisis levels, giving polyester filament yarn a substantial cash margin. However, this paper profit hasn't translated into actual sales momentum. Industry public data show POY inventory at 30 days, FDY at 35.7 days, and DTY at a high 41.8 days, all at elevated levels.
The 'Price Cut Paradox' Behind High Cash Flow
For fabric weavers, high cash flow implies more room for price declines. Without urgent orders, purchasing for inventory risks a cost difference of hundreds of yuan per ton within a month, with no difference in final fabric quality. Hence, a strong 'buy only when necessary' sentiment dominates the market.
Polyester mills face a different calculus. The current inventory was produced under higher raw material costs. Cutting prices now would turn unrealized losses into actual losses. With capacity utilization at only 73.81%, mills have low shipment pressure and prefer gradual price reductions and slow destocking.
Weak Demand Is the Root, Weather and Exports Are Wildcards
The core driver of this supply chain divergence is weak domestic demand. Summer is normally peak season for sun-protection fabrics, but unusually cool weather has delayed the season, suppressing weavers' stockpiling appetite.
However, there are bright spots. With the Strait of Hormuz shipping channel fully reopened, global crude and commodity trade is normalizing. Multiple overseas economies are accelerating recovery, likely boosting international textile demand. Export orders could partially offset domestic weakness and support polyester yarn prices.