Crude oil futures have returned to pre-Mideast crisis levels, but polyester filament prices remain nearly 1,000 yuan per ton higher. On June 24, WTI crude briefly dipped below $70, and despite a slight rebound on geopolitical news, it hovered around $70 again on June 26. This price divergence is intensifying the tug-of-war between upstream and downstream players in the polyester chain.
The Inventory and Cost Dilemma
From a futures perspective, PTA and MEG have largely retraced to pre-rally levels, implying a significant drop in raw material costs for polyester filament. However, polyester plants face a different reality. Current inventory levels stand at 30 days for POY, 35.7 days for FDY, and 41.8 days for DTY. These stocks were produced under high-cost raw materials; selling at lower prices would turn paper losses into real losses. Thus, despite healthy apparent cash flow, plants prefer to lower prices gradually rather than slash them sharply.
For weavers, this price gap signals further downside potential. Without urgent orders, buyers tend to postpone purchases to avoid potential losses of hundreds or even thousands of yuan per ton within a month. This 'buy only when necessary' stance has weakened the pace of polyester plant shipments, reinforcing the standoff.
Root Cause: Weak Demand vs. Supply
The core divergence stems from a supply-demand imbalance. Domestic consumption remains weak, especially as unseasonably cool summer temperatures have delayed the seasonal peak for sun-protective fabrics. Meanwhile, although polyester plants have kept capacity utilization at a three-year low (around 73.81%), no substantial production cuts have occurred, keeping supply pressure intact.
However, brighter spots exist. With the Strait of Hormuz shipping channel fully reopened, global crude and commodity trade is normalizing, and several overseas economies are accelerating their recovery. This could boost international textile demand, with export orders partially offsetting domestic weakness and providing a floor for polyester filament prices.
Near-Term Outlook: Stalemate Continues
In summary, the polyester chain's structural contradiction of 'weak demand, wide price spread' is unlikely to resolve soon. Polyester plants, constrained by high-cost inventory, resist aggressive price cuts; weavers delay purchases, anticipating further declines. This tug-of-war will dominate market dynamics in the coming weeks. For buyers, the challenge is balancing risk: a sudden price rebound could make delayed procurement costly. For plants, the key lies in managing inventory digestion while protecting cash flow.