The polyester industry chain is experiencing a rare phase of 'rational cooling.' Morgan Stanley has revised its Brent crude oil forecast downward for the second time in two weeks, predicting average prices of $75 per barrel in Q3 and Q4. With the Strait of Hormuz reopened and oil tankers resuming passage, the energy crisis has eased substantially in the short term. For the polyester industry, this means the cost 'ceiling' is effectively locked, making the extreme price surges of early spring unlikely to recur.
Promotion Fatigue: Downstream 'Won't Even Look'
On June 29, polyester plants launched a new round of promotions, but daily sales-to-production ratios hovered around 70%, dropping to just 30% the next day. Compared to previous rounds, where even 'one-day wonders' easily exceeded 100%, the current response is strikingly weak. The market has fallen into 'promotion fatigue'—factories offer discounts, but weaving companies show minimal interest in even small-scale restocking.
This indifference is well-founded. Downstream weaving enterprises have been squeezed by extremely low margins over the past two years, leaving little room for maneuver. The industry consensus is clear: no orders, no production. Fabric price elasticity is also poor, with the breakeven point between inventory and fresh gray fabric still under negotiation. Buyers increasingly share the view that since the crude oil 'ceiling' has dropped, polyester prices likely have further room to decline—making waiting more rational than buying now.
The Contradiction of High Inventory and High Costs
Polyester plants face a dilemma. On one hand, POY, FDY, and DTY inventories have reached 30, 35.7, and 41.8 days, respectively, and continue to accumulate. On the other hand, the raw materials currently in use were purchased at higher costs, meaning deep discounts would result in direct losses. This combination of 'high inventory + high cost' leaves plants reluctant to cut prices aggressively yet unable to tolerate further inventory growth.
If downstream demand remains weak, polyester plants have limited options: either allow prices to drift lower gradually to digest stock, or launch a more aggressive one-time clearance sale. Historically, the latter tends to restore market balance faster, but it requires sufficient cash flow resilience.
Key Variable for H2 Market Momentum
The current market is not without bright spots. Both upstream and downstream players are cautiously stocking, and H1 capacity release has been limited, meaning overall industry inventory is at a relatively low level compared to the past two years. Once demand shows signs of recovery, supply-demand mismatches could emerge quickly, restoring fabric price elasticity.
From a product perspective, summer sun-protective clothing was the most likely category to ignite demand, but frequent heavy rainfall and delayed high temperatures in China have pushed that demand back. Meanwhile, no blockbuster product like last year's 'new Chinese-style' fabric has yet emerged. The market is still waiting for a clear consumption catalyst.