On July 3, 2024, the average sales-to-production ratio of polyester filament yarn sample enterprises dropped to 33.0%, a mere 1.3-percentage-point increase from the previous day. This means that over 60% of daily capacity failed to find buyers, pushing market liquidity near a freezing point.
What the Data Reveals About the Industry
Among 24 sample companies, only one achieved a 200% ratio, while the majority languished between 15% and 40%, with even a 0% outlier. This 'long-tail' distribution is no coincidence: leading players barely sustain volume through established channels, while small and medium mills face mounting inventory risks. More concerning is the sustained low performance—similar figures on July 1 and 2 suggest a trend, not a blip.
Manufacturer sentiment has clearly diverged. Some have cut prices to stimulate sales, but downstream users remain indifferent, sticking to rigid replenishment. This 'cuts don't sell' scenario reflects a dual contraction: upstream capacity remains high, while downstream weaving mills, burdened by weak orders and high finished-goods inventories, suppress purchasing appetite.
Cost vs. Demand: When Will the Tug-of-War End?
The core contradiction lies between cost support and demand weakness. Crude oil has lost upward momentum; the Middle East situation, though volatile, has not caused material supply disruptions, leaving polyester feedstock without clear direction. If oil weakens further, the cost base for polyester filament yarn will shift down, putting additional pressure on manufacturers to lower prices.
But demand shows no signs of recovery. The traditional off-season for textiles, combined with sluggish overseas order inflows, has kept downstream loom utilization rates below historical averages. Even if polyester filament yarn prices drop, end-users prefer 'buy-as-needed' strategies, avoiding any inventory buildup. This zero-speculative mentality amplifies the sales slump.
Regional Divergence and Supply Chain Implications
In key production hubs like Shengze, Changxing, and Xiaoshan, the chill is palpable. Large enterprises leverage financial strength to maintain operating rates, sacrificing margins to hold market share. In contrast, some small and medium factories have begun voluntary output cuts to prevent inventory capital from being tied up. This divergence signals an accelerated industry shakeout: capacity lacking cost advantages or customer loyalty faces elimination risk.
For downstream buyers, the market appears to favor them, but practical room to maneuver is limited. Low-price sources exist, but quality consistency and delivery reliability must be scrutinized. Export-oriented firms face a more complex scenario: overseas clients are pressing harder for discounts, while the pass-through of domestic raw material cost declines lags, squeezing profit margins from both ends.
Actionable Recommendations
For Procurement Managers - Secure rigid-demand orders for the next 1-2 weeks at current low prices, but avoid long-term fixed contracts to retain flexibility. - Monitor suppliers with sales ratios consistently below 30%—they may face cash flow risks; assess their delivery capability. - Track crude oil and PTA futures; if oil breaks key support levels, wait for even lower entry points.
For Export Enterprises - Introduce raw material price linkage clauses in export quotations to reduce your risk exposure. - Use the domestic price downturn to negotiate more favorable long-term contracts with overseas clients, aiming to gain market share. - Hedge against RMB exchange rate fluctuations between raw material procurement and export receipts.
The stalemate in the chemical fiber market will not last indefinitely. The key variables to watch: whether crude oil can stabilize and rebound, and whether terminal textile orders recover after the traditional August off-season. Until then, every link in the supply chain must prepare for a tough ride.