As the second half of 2026 begins, the polyester industry chain is experiencing a rare 'rational standoff.' Support from upstream crude oil costs is weakening, while downstream weaving mills, with severely compressed profit margins, show extreme caution in raw material procurement. The market is trapped in a delicate balance: promotions fail to boost sales, inventories keep rising, yet overall stockpiling across the chain is at a multi-year low. This contradictory pattern could trigger a price elasticity rally driven by supply-demand mismatches in H2.
Cost Side: Crude Oil 'Ceiling' Moves Down
Morgan Stanley has revised its oil price forecast downward for the second time in two weeks, shifting market focus from geopolitical risks to global oversupply. The institution expects average spot Brent crude prices of $75 per barrel in both Q3 and Q4. This forecast follows the reopening of the Strait of Hormuz, with stranded tankers gradually departing the Persian Gulf, temporarily easing the energy crisis.
For the polyester industry, lower crude prices mean reduced cost pressure on polyester filament yarn. The extreme scenario of crude oil surging 50% in days, seen after the Spring Festival, is unlikely to recur. Polyester mills will find it harder to drive price hikes through rising costs, marking a temporary end to upstream inflation logic.
Demand Side: Weaving Mills Adopt 'Order-Based Production'
The behavior of downstream weaving mills has fundamentally changed. Profits squeezed over the past two years have severely limited cash flow and operational flexibility, resulting in poor capacity utilization. Mills now adhere strictly to a 'no orders, no production' strategy. Fabric price elasticity is also weak, with breakeven points for inventory and fresh grey fabrics still in play.
This extreme rationality is reflected in purchasing behavior. On June 29, polyester mills launched major promotions, but sales only reached around 70% of capacity; the next day, they plummeted to 30%. Compared to previous promotions that often saw sales exceed 100% capacity, the market has fallen into 'promotion fatigue.' Downstream buyers only replenish small volumes at low prices, showing no appetite for large-scale stockpiling.
High Inventories vs. Low Stockpile Paradox
Polyester mills face significant inventory pressure. Industry data shows POY, FDY, and DTY inventories at 30 days, 35.7 days, and 41.8 days, respectively, and still accumulating. With high raw material costs from earlier purchases, mills are reluctant to offer deep discounts. However, if downstream demand remains weak, polyester filament may face prolonged price declines or a major sell-off.
Yet a counterintuitive indicator exists: cautious stockpiling across the entire textile chain and limited capacity utilization in H1 mean current market inventories are relatively low compared to the past two years. If demand recovers—triggered by a hit product like last year's 'New Chinese-style' fabric or delayed summer sun-protection apparel sales due to weather—a short-term supply-demand mismatch could restore fabric price elasticity.