The ceiling for international crude oil is lowering. Morgan Stanley now forecasts Brent crude to average $75 per barrel in Q3 and Q4 of 2026. With the Strait of Hormuz reopened and stranded tankers departing, the short-term energy crisis has largely eased. For the polyester chain, this means the most extreme upward cost pressure has passed; polyester filament yarn is unlikely to see the same surge of thousands of yuan per ton seen in early March.
Yet this cost relief hasn't translated into downstream buying enthusiasm. On June 29, polyester plants launched another major promotion, but daily sales-to-production ratio hovered around 70%, plunging to 30% the next day. Compared to previous promotions that easily exceeded 100%, the market has clearly entered "promotion fatigue." Downstream weaving mills are barely buying, only making small replenishments at low prices, with no intention of large-scale stockpiling.
High Inventories vs. Profit Margin Battle
Polyester plants face a dilemma. On one hand, their own raw material inventory costs are high, limiting room for concessions; on the other, finished product inventories keep accumulating. Public data shows POY, FDY, and DTY inventory days at 30, 35.7, and 41.8 respectively, still rising. If downstream remains indifferent, plants may have two choices: let polyester yarn slide gradually, or launch a more aggressive clearance sale.
Downstream weaving mills are more rational than ever. After two years of squeezed margins, their financial flexibility is severely limited. Without orders, they resolutely keep looms idle, making capacity elasticity extremely poor. Fabric price elasticity is also weak, with breakeven points between inventory and fresh grey fabric still in negotiation. This "extreme rationality" has rendered traditional polyester promotions ineffective.
Potential for H2 Market Trigger
The entire textile market is awaiting a catalyst, similar to last year's Spring Festival "New Chinese-style" fabric hit. In the short term, summer sun-protection clothing was seen as a potential category, but this year's heavy rainfall and delayed heat have postponed demand.
A more structural opportunity lies in the inventory cycle. Because both upstream and downstream have been cautious in stockpiling and capacity utilization in H1, current industry inventories are relatively low compared to the past two years. Once demand truly recovers in H2—whether from seasonal orders or new categories—a short-term supply-demand mismatch could occur. This mismatch would directly restore fabric price elasticity and offer a chance to repair previously suppressed margins.
May and June have been tough for the textile industry. The "golden March-April" season is long gone, and "golden September-October" remains distant. The worse the market, the higher the risks; some firms may resort to unorthodox methods. Textile professionals should stay alert and closely monitor payment security.