Crude oil futures have returned to pre-Middle East crisis levels, but polyester filament yarn still carries a premium of nearly 1,000 yuan per ton. This price gap is tearing apart the game between upstream and downstream players.
The Structural Roots of the Price Gap
On June 24, U.S. WTI crude oil futures briefly fell below $70 per barrel. Although a slight rebound followed due to geopolitical news, the overall level has returned to the range before the current round of price hikes. However, polyester filament yarn prices have not followed suit. According to publicly available industry data, current polyester yarn prices remain about 1,000 yuan per ton higher than before the conflict. This is not simply a lag in price transmission but a direct reflection of cost structure mismatches across different links in the industrial chain.
Polyester plants' cash flow looks healthy on paper—given that PTA and ethylene glycol futures have essentially returned to their starting points—but actual profits are far less rosy. The current yarn inventory held by factories was produced at high costs. Data shows that POY factory inventory stands at about 30 days, FDY at 35.7 days, and DTY at a staggering 41.8 days. If prices were slashed now, floating losses would become realized losses. Therefore, with low operating rates, polyester plants prefer to lower prices slowly rather than clear inventory aggressively.
The 'Buy Only When Necessary' Strategy Downstream
For weavers, the high cash flow in polyester yarn implies significant room for future price declines. Unless they have orders to fulfill, purchasing for stockpiling alone could mean a cost difference of several hundred to a thousand yuan per ton within a month, while the final product sells at the same price. As a result, the entire downstream sector has entered a 'buy only when necessary' wait-and-see mode. This mentality is shrinking market liquidity and further suppressing transaction volumes.
On the capacity front, on June 24, the capacity utilization rate of domestic direct-spun polyester filament yarn plants was 73.81%, up slightly by 0.29% from the previous week. However, over a longer timeframe, this load level remains at a three-year low. While low operating rates help polyester plants control inventory growth, they cannot change the reality of weak demand.
Supply-Demand Imbalance Meets Abnormal Weather
The core root of the current divergence in the industrial chain is a supply-demand imbalance and weak domestic demand. This judgment is not baseless. June is typically the peak season for sun-protection apparel fabrics, but this year's unusually cool weather has delayed consumer demand, preventing the related market from taking off. Abnormal weather has not only suppressed domestic demand but also made downstream companies more cautious.
However, not all news is negative. With the full reopening of the Strait of Hormuz shipping channel, global crude oil and commodity trade order is being restored. The accelerating recovery of multiple overseas economies is expected to boost international textile consumption demand, providing some support for China's textile export market. The incremental export orders may partially offset the weakness in domestic demand and ease the downward pressure on the polyester yarn market.
When Will the Stalemate Break?
In the short term, the pattern of weak supply-demand and high price gaps in the polyester chain will persist. The tug-of-war between upstream and downstream will continue to dominate market trends. A balance point may emerge at one of the following junctures: first, a further drop in crude oil prices, forcing polyester plants to cut prices proactively; second, a concentrated release of export orders, changing demand expectations; or third, a surge in sun-protection fabric demand as weather warms up, creating a short-term procurement pulse.