Oil prices plunged, costs collapsed, but every link in the polyester chain is feeling the pain.
Downstream weaving firms are losing money on every order; upstream PTA plants anxiously await load recovery; midstream filament producers have built a "profit fortress" through output cuts. Three conflicting demands have created a deadlock—no one is willing to give in first.
Cost Windfall Missed, Downstream Trapped in 'Can't Afford' Dilemma
Conventional wisdom suggests that falling crude oil prices would lower polyester raw material costs, giving downstream weaving some breathing room. But reality tells a different story. China Customs data shows that filament prices have fallen far less than crude or PTA since July, with processing margins actually widening.
For end-use weaving mills, this means "bread is cheaper, but flour is still expensive." In textile hubs like Shengze and Keqiao, factories face a dilemma: if they calculate costs based on current filament prices, orders are unprofitable; if they wait for a "catch-down" in filament, they risk missing delivery deadlines.
This "loss-per-order" situation has forced downstream mills to adopt an extreme strategy—keep looms idle rather than restock. Industry data indicates that the Jiangsu-Zhejiang loom operating rate has fallen below 60% in late July, lower than last year's level.
Upstream PTA: Inventory Anxiety and Passive Waiting
The upstream side is equally anxious. In July, PX and PTA plants conducted large-scale scheduled maintenance, pushing operating rates to year-to-date lows. With the US-Iran agreement progressing and Hormuz Strait shipping gradually resuming, imported raw material arrivals are expected to increase from August onward, rapidly easing the earlier "raw material shortage" fears.
But the problem is that polyester operating rates haven't recovered in tandem. Filament firms maintain significant output cuts, directly tightening PTA spot liquidity and slowing inventory destocking. For PTA plants, the core demand is for filament producers to raise loads—only with higher filament output and sales can PTA demand recover and the forward balance sheet be repaired.
The lever to unlock this chain is filament promotions. But reality shows filament firms are unwilling to cooperate.
Filament's 'Profit Fortress': Output Cuts as Hard Currency
Filament producers' logic is rooted in painful lessons from past years. Previously, every time raw material prices dropped, filament mills would cut prices first, squeezing processing margins and turning themselves into mere "conveyor belts" for upstream. This time, they've chosen a different strategy: lock in profits by cutting output.
Industry calculations show that current filament processing margins have risen to over 500 yuan per ton, compared to a normal 100-200 yuan per ton. Even at only 70% capacity, total profits are higher. This "sell less but earn more" model gives filament firms the backbone to hold firm.
They fear not just price drops, but the "expectation of price drops" itself. If they concede now, downstream will think, "If they can cut today, they can cut again tomorrow," deepening wait-and-see behavior and making inventory harder to clear.
Stalemate Under Tripartite Game
The current deadlock is clear and brutal:
- Filament firms refuse to cut prices → downstream refuses to buy → sales volume stays low
- Low sales → filament inventory stays high → no incentive to raise loads
- Filament loads stay low → PTA sales stagnate → upstream destocking blocked
Any party that gives in first risks becoming the "sacrifice" of the chain. This zero-sum game shows no near-term sign of breaking.
But the stalemate won't last forever. When filament inventory reaches a critical threshold, or when seasonal export orders pick up, the balance may tip.