On July 2, the polyester industry chain sent a warning signal: the average sales rate of polyester filament samples dropped to 31.7%, down 4.1 percentage points from the previous day. This means that for every 100 tons of filament produced, fewer than 32 tons were actually sold to downstream weaving mills. Inventory is rapidly accumulating at the factory end, while downstream purchasing intent has nearly hit rock bottom.
The Transmission Logic Behind the Sales Rate Cliff
A polyester filament sales rate hovering around 30% is historically a 'freezing point' for the industry. Individual data from sample companies shows extreme unevenness: the highest was only 60%, the lowest was 0%, and more than half of the companies had sales rates below 30%. This collective low performance indicates a systemic market chill, not an isolated issue.
The root cause lies in the mismatch between cash flow and demand. Currently, polyester filament cash flow remains high, meaning upstream polyester factories still enjoy decent profit margins on raw material costs and have no urgent incentive to cut prices. However, downstream weaving mills face high-priced filaments that have eroded their already thin processing margins. Resistance has escalated from 'wait-and-see' to substantive procurement cuts, directly causing the sales rate plunge.
Upstream vs. Downstream: A Price Tug-of-War, Who Blinks First?
The current polyester filament market has entered a classic 'prisoner's dilemma' game. Upstream factories, backed by strong cash flow, try to keep prices firm to protect profits; downstream mills use extremely low procurement volumes to force price concessions.
Historically, a sales rate below 40% for several consecutive days usually forces polyester factories to launch promotional policies or cut production within 1-2 weeks to balance supply and demand. However, this time is unique because upstream cash flow abundance gives factories greater endurance to hold prices. Downstream weaving mills face the real pressure of slow recovery in end garment orders, making price transmission difficult.
This deadlock benefits no one. If upstream delays price cuts, downstream may further reduce operating rates, shrinking demand further. If upstream cuts first, it could trigger expectations of a price collapse, actually suppressing procurement.
Dual Tests: Inventory and Operating Rates
The direct consequence of a persistently low sales rate is a rapid increase in polyester filament social inventory. At the current 31.7% sales rate, polyester factories are adding nearly 70% of daily production to inventory. Without adjustment, inventory levels could hit warning levels within a week.
Inventory pressure will in turn force factories to adjust operating rates. Current industry operating rates remain high, but some companies are already considering maintenance shutdowns. If production cuts broaden, they will reduce demand for raw materials PTA and MEG, affecting the entire polyester chain's price center.
For downstream weaving mills, the current strategy is to 'buy time.' By suppressing procurement, they force upstream to lower prices under inventory pressure, thus obtaining lower raw material costs. The risk is that if end orders suddenly surge, mills may face a supply shortage.
Dual Pressure: Foreign Trade and Domestic Demand
On the demand side, polyester filament downstream covers apparel, home textiles, and industrial textiles. Foreign trade orders are stable but lack growth due to global inflation and geopolitics. Domestic demand is slowing due to weak consumer confidence and slower apparel retail growth.
Home textiles are relatively better, driven by summer replacement demand and e-commerce promotions, but the volume is insufficient to reverse the overall trend. Industrial textiles demand from infrastructure and automotive sectors remains stable but cannot absorb high filament inventory.
Price Outlook: Short-Term Pressure, Medium-Term Depends on Costs
Considering all factors, polyester filament prices face significant downward pressure in the short term. If the sales rate continues around 30%, factories will likely launch price cuts or incentives around mid-July. The extent of cuts depends on inventory accumulation and upstream PTA price trends.
In the medium term, cost-side changes will be key to determining the price floor. International crude oil prices are volatile. If oil weakens, PTA cost support weakens, opening more room for polyester filament price cuts. Conversely, if oil remains high, factory concessions are limited, and the market may enter a longer 'bottoming-out' phase.