International oil prices have dropped sharply following the US-Iran peace agreement and the gradual reopening of the Strait of Hormuz, falling back to pre-conflict levels. This seemingly positive shift for the entire petrochemical chain has instead plunged the polyester industry into a new stalemate—the cost collapse has not spurred market prosperity but ignited a fierce three-way tug-of-war among upstream raw material suppliers, midstream filament yarn producers, and downstream weaving mills.
Downstream Weaving: The Call for 'Fair Prices' Amid Losses
Before the oil price crash, downstream weaving mills had long suffered from the 'flour more expensive than bread' dilemma—upstream filament yarn prices remained high, while orders for texturing and weaving could not be raised, making production-at-purchase universally unprofitable. Now that raw material costs have fallen sharply, downstream firms might have expected relief, but filament yarn prices have proven stubbornly resistant to declines. For weaving mills, the current ultra-high processing margins in the filament yarn sector seem unreasonable—'the upstream eats meat while the downstream can't even get soup.'
Their logic is straightforward: they will wait until filament yarn prices 'catch down' to reasonable levels before restocking. Without reasonable raw material costs, accepting orders means selling at a loss. This wait-and-see attitude has led most weaving mills to adopt a just-in-time purchasing strategy, holding virtually no inventory.
Upstream Raw Materials: Waiting for Filament Yarn to 'Move'
In contrast to downstream patience, upstream producers—especially PX and PTA makers—face a different pressure. In July, they conducted massive plant maintenance, further reducing operating rates. But from August onward, as shipping in the Strait normalizes and refinery maintenance ends, the raw material shortage that plagued the market will gradually ease. At that point, the upstream's biggest worry is whether the polyester sector can ramp up utilization to match the returning supply.
The upstream's core desire is for filament yarn producers to increase operating rates. Only when filament loads rise can PTA demand recover, accelerating inventory destocking in the short term and balancing the supply-demand sheet in the long run. The most effective lever to boost filament utilization is promotional sales—the upstream is eagerly waiting for filament producers to launch a major sale. Once sales volumes pick up and inventory pressure eases, filament producers would have the confidence to raise loads, and upstream destocking would gain momentum.
Filament Yarn Producers: Building a 'Profit Wall' Through Cuts
Filament yarn producers operate on a completely different logic. In past years, every time raw material prices fell, they cut prices to boost sales, only to see their processing margins squeezed to nothing, becoming mere 'porters' for the upstream. Now, they seem determined to defend the profit floor they have painstakingly built. Previously, running at full capacity yielded a profit of 100 yuan per ton; now, at 70% load, they earn 500 yuan per ton—a compelling economic calculation in the current environment.
Their fear is that if they lower prices now, it will trigger deeper downstream wait-and-see ('if they cut today, will they cut again tomorrow?') and undo all previous output reduction efforts. Thus, they adopt a hardline stance, sacrificing sales rates to maintain price levels.
The Stalemate: Conflicting Demands Lock the Chain
The current polyester chain has formed a self-reinforcing deadlock: filament producers refuse to cut prices, so downstream mills stay out of the market, and sales volumes remain flat; with no sales, filament inventory piles up, preventing any load increase; without higher filament loads, upstream PTA sales stagnate, thwarting the upstream's destocking goals.
According to industry data, this standoff has persisted for several weeks, with no party willing to concede first. For buyers and traders, this represents both a risk and an opportunity—the key lies in accurately predicting the turning point of the game.