Polyester Industry Enters 'Rational Game' Phase: Can Low Inventories Spark Price Elasticity in H2?

Entering the second half of 2026, the game logic of the polyester industry chain is undergoing a fundamental shift. The 'geopolitical premium' of crude oil is rapidly fading. The reopening of the Strait of Hormuz has quickly reversed the energy cost surge caused by tensions in the Middle East. Morgan Stanley has once again lowered its oil price forecast, stating that market focus has returned to global oversupply, with average Brent crude prices expected at $75 per barrel in Q3 and Q4. This means the 'ceiling' for polyester filament yarn costs has clearly lowered, making it impossible for polyester plants to drive product price increases through raw material surges as they did earlier this year.

Promotion Fatigue: Downstream Mills Turn Ultra-Rational

On June 29, polyester plants launched another massive promotion, but the market response was extremely cold. The sales-to-output ratio hovered around 70% that day, and quickly dropped to near 30% the following day. Compared to previous promotions—which, though often 'one-day wonders', at least easily exceeded 100%—even this brief 'carnival' has disappeared. The procurement strategy of downstream weaving mills has turned to extreme rationality: no orders, no production; raw material purchases are only for small replenishment at low prices, with no intention of large-scale stocking. Behind this 'promotion fatigue' is the reality of severely squeezed profits over the past two years, drastically reducing companies' maneuvering room. Fabric price elasticity is extremely poor, and the breakeven point for inventory fabrics and new greige fabrics is still fiercely contested.

The 'Double Kill' of High Inventories and Weak Demand

Polyester plants are caught in a dilemma. On one hand, their own raw material inventory costs are high, limiting room for concessions; on the other hand, finished product inventories are rapidly accumulating. Industry data shows that POY, FDY, and DTY inventories are at 30 days, 35.7 days, and 41.8 days respectively, and are still climbing. If downstream demand remains unresponsive, polyester filament yarn prices face two possibilities: continued gradual decline, or a larger, more concentrated sell-off. The demand side is equally unoptimistic. Heavy rainfall has been frequent in China this summer, delaying the arrival of high temperatures and postponing demand for summer sun-protective clothing, which was initially expected to be a strong driver. The entire textile market is waiting for a 'catalyst'—a hit product like the 'New Chinese Style' fabric from last year's Spring Festival—but for now, short-term momentum remains insufficient.

Potential Elasticity in a Low-Inventory Environment

However, the other side of the coin may be worth noting. Due to cautious stocking across the supply chain since the start of the year and relatively limited capacity utilization in H1, current inventory levels across various links are at historical lows compared to the past two years. This means that once market demand shows a substantive recovery—whether from the seasonal 'Golden September and Silver October' pull or the explosion of a new fabric category—a supply-demand mismatch could occur within a short period. When that happens, fabric price elasticity is likely to recover, potentially leading to a phased price increase. This 'low inventory + low operating rate' scenario lays the groundwork for H2 market dynamics, but the prerequisite is a clear signal from the demand side.

Practical Recommendations

For Buyers - Current raw material prices are in a phase of weakening cost support versus inventory pressure, and may continue to decline gradually. It is recommended to purchase on an as-needed basis, avoiding large-scale hoarding, but watch for opportunities to replenish in batches during concentrated price cuts by polyester plants. - Pay close attention to the stocking window before the 'Golden September and Silver October' period, especially for inventory changes in potential hit categories like sun-protective and outdoor functional fabrics. Once the sales-to-output ratio shows continuous improvement for several days, consider moderately increasing purchase volumes.

For Exporters - Falling crude oil prices imply that both shipping costs and raw material costs may decrease simultaneously, which is favorable for quoting orders. It is advisable to include some price flexibility clauses in quotations to hedge against raw material volatility. - Closely monitor overseas demand for differentiated products such as 'New Chinese Style' fabrics and recycled polyester. These products are more likely to exhibit price elasticity in a low-inventory environment, so lock in capacity with suppliers in advance.