Promotions can no longer drive polyester sales. On June 29, polyester mills launched a routine discount campaign, achieving only 70% production-sales ratio, which plummeted to 30% the next day. Earlier rounds had at least sparked a one-day frenzy with ratios exceeding 100%. This isn't simple demand weakness; it signals a new rational phase in supply chain dynamics—downstream buyers no longer respond to price cuts unless backed by firm orders.
Oil Price Expectations Lower the Cost Ceiling
The key variable underpinning this shift is a systemic downward revision of oil price expectations. Morgan Stanley has twice lowered its Brent crude forecast within two weeks, now expecting Q3 and Q4 averages at $75 per barrel. The trigger is the reopening of the Strait of Hormuz—stranded tankers are resuming passage, easing the energy crisis in the short term. This means the cost-side pressure on polyester filament will not replicate the extreme surges seen in early March, narrowing the price fluctuation range.
For polyester mills, weaker raw material support makes it harder to pass high inventory costs downstream. China Customs data shows POY, FDY, and DTY inventories at 30, 35.7, and 41.8 days respectively, still accumulating. Without downstream uptake, mills face either prolonged price erosion or a more aggressive clearance sale—but the latter's success hinges on genuine demand.
Downstream 'No Orders, No Production': Rational Defense at a Cost
The weaving side is acting with near-perfect rationality. After two years of margin compression, companies have minimal room for maneuver and extremely low operating elasticity. Industry sources reveal that the core decision logic has been reduced to one rule: no orders, no production. Fabric price elasticity is also low, as inventory and fresh grey fabric breakeven points are still under negotiation, leading mills to prefer shutdowns over additional inventory risk.
This defensive strategy directly causes 'promotion fatigue' in polyester sales. Even when mills offer discounts, weavers only replenish small amounts at low prices, with no appetite for bulk stocking. The entire chain is stuck in a stalemate of high upstream inventories and low downstream stocks, lacking a trigger for restocking.
Catalysts for a Turnaround: Blockbusters and Weather
Hope is not entirely lost. The industry widely expects H2's key trigger to be a breakout product like last year's 'New Chinese-style' fabric. In the short term, summer sun-protection clothing was the most likely candidate, but heavy rainfall across China has delayed high temperatures and related demand, neutralizing this catalyst for now.
However, the low-inventory structure itself offers elastic potential. Due to cautious stockpiling over the past two years and limited H1 capacity utilization, current finished goods inventories are relatively low. Once demand genuinely recovers—whether driven by a blockbuster or seasonal repair—it could trigger short-term supply-demand mismatches and restore fabric price elasticity, which has been suppressed for nearly two years.
Risk Warnings and Practical Recommendations
May and June were tough for textile players. The 'golden March-April' is long past, and 'golden September-October' is still distant. The worse the market, the higher the risk. Historical patterns suggest that during cash-strapped cycles, some companies may resort to irregular practices; payment security warrants constant vigilance.