International oil prices plummeted following the US-Iran peace agreement and the reopening of the Strait of Hormuz, which should have brought cost relief to the polyester industry chain. However, the reality is a three-way stalemate among upstream raw material suppliers, midstream filament producers, and downstream weavers, each with conflicting demands and unwilling to concede.
Cost Collapse, Profit Distribution Imbalance
Oil prices have fallen back to pre-war levels, drastically reducing polyester raw material costs, but filament prices remain unusually resilient. Industry data shows that current filament processing margins are at historic highs, while downstream weavers continue to suffer from the 'flour more expensive than bread' dilemma—high raw material costs but stagnant order prices, making immediate production universally loss-making. This profit distribution imbalance is the root of the chain's conflict.
Filament producers have room to cut prices, but they choose production cuts to protect margins. In past years, every raw material drop triggered promotions and volume sales, squeezing processing fees to near zero, leaving them as mere 'conveyors' for upstream. Now, operating at 70% capacity with a profit of 500 yuan per ton is more attractive than full capacity at 100 yuan per ton. Cutting prices now would lead downstream to expect further drops, deepening wait-and-see behavior and negating the efforts of production cuts.
The Circular Dilemma of Three Demands
Upstream raw material suppliers are equally anxious. PX and PTA plants underwent major maintenance in July, reducing operating rates, but after August, with shipping recovery and refinery maintenance ending, raw material shortages will ease. The key now is whether polyester plants can raise operating rates to match future supply. Their core desire is for filament producers to increase utilization, boosting direct PTA demand and accelerating destocking.
Downstream weavers are waiting for filament prices to 'catch down' to reasonable levels. They see the high filament processing margins as unjustified; without reasonable raw material costs, taking orders means losing money. So they hold off on restocking.
This creates a circular trap: filament refuses to cut prices, downstream refuses to buy, sales remain low; low sales prevent filament inventory from falling, making it impossible to raise operating rates; low filament rates mean PTA sales stagnate, blocking upstream destocking. No party wants to make the first move.
Industry Impact: Stalemate Hard to Break Soon
The impact of this game is unfolding across the chain. Filament producers, using production cuts as a 'blade,' have temporarily choked both ends. But the longer the stalemate, the greater the loss pressure on downstream weavers, potentially forcing some small- and medium-sized enterprises to cut or halt production. Meanwhile, PTA inventory pressure will accumulate; if filament rates remain low through August, PTA may face a new round of oversupply when raw material supply recovers.
For buyers, current prices are at a critical game point. Whether filament prices will 'catch down' depends on downstream restocking willingness and filament inventory pressure. For foreign trade companies, raw material cost volatility must be factored into order pricing; short-term contracts should include price adjustment clauses.