The US-Iran peace agreement triggered a sharp drop in international oil prices, reopening the Strait of Hormuz and collapsing energy costs previously inflated by geopolitical risks. However, the polyester chain did not see a win-win situation; a tripartite game over volume, price, and profit is unfolding among upstream raw materials, midstream filament, and downstream weaving.
Cost Collapse Reveals Divergent Interests
Oil price declines directly lowered polyester raw material costs, but each link has different demands. Upstream (PX, PTA) wants filament plants to raise operating rates to absorb their inventories; downstream weaving enterprises hope filament prices will 'correct' to a reasonable level, otherwise current production remains loss-making; filament producers maintain high processing profits through production cuts, unwilling to lower prices easily.
The core conflict: fulfilling upstream and downstream wishes seems to come at the expense of the filament segment—if filament cuts prices, its high profits will be quickly eroded; conversely, if filament holds prices, both upstream and downstream face inventory buildup or order losses.
Filament Production Cuts Become Key Variable
Filament producers have a clear strategy: in past years, each raw material price drop triggered promotional cuts, squeezing processing margins to near zero, making them mere 'conveyors' for upstream. Now, they are determined to protect profit floors—cutting operating rates to 70%, lifting per-ton profit from 100 yuan to 500 yuan. This tough stance creates a deadlock: filament refuses to cut prices, downstream stays away, sales remain low; low sales prevent inventory reduction, making load increases impossible; without higher filament loads, upstream PTA struggles to sell, disrupting destocking.
Industry data shows PX and PTA underwent major maintenance in July, further lowering operating rates, but from August onward, as Strait shipping resumes and refinery maintenance ends, raw material shortages may ease. This means the key now is whether the polyester segment can raise loads to match future raw material supply recovery.
Downstream Weaving: Awaiting 'Rational' Price Correction
Downstream weaving firms suffer from 'flour being more expensive than bread'—upstream filament prices are high, but end-order prices for texturing and weaving cannot rise, leaving current production loss-making. After oil price collapse, they saw hope, but filament prices remained stubbornly high, sparking anger. They believe the current high processing margins in filament are unjustified.
Downstream is waiting for filament prices to 'correct' to a reasonable level before restocking. Without reasonable raw material costs, taking orders means losing money. This 'rational cost demand' has intensified wait-and-see sentiment in the short term, keeping sales data depressed.
Upstream: Eager for Filament to 'Move'
Upstream anxiety is no less than downstream. In July, PX and PTA loads dropped further, but future raw material shortages may ease. The core wish of upstream is for filament plants to raise loads—only then can PTA demand recover, accelerating destocking near-term and balancing sheets long-term.
The most effective lever to raise filament loads is promotional volume. Upstream is hoping filament plants will launch a big promotion: once sales volume picks up, inventory pressure eases, giving filament confidence to raise loads, reviving upstream destocking. But filament plants currently resist.
When Will the Deadlock Break?
Currently, no party in the polyester chain is willing to make concessions. Filament producers build a 'profit fortress' with cuts, downstream waits for 'price correction,' and upstream is caught in the middle. Industry analysis suggests breaking the deadlock requires an external catalyst: either oil prices fall further, compressing filament margins and forcing price cuts; or end-order demand suddenly recovers, forcing downstream to accept current prices; or upstream further cuts production to support prices, altering the game.
In the short term, polyester filament prices are expected to oscillate, with downstream restocking timing highly dependent on filament promotional moves. For buyers, it is crucial to monitor filament inventory changes and operating rate signals—once a large-scale promotion appears, it may be a staged bottom-fishing opportunity.