As the second half of 2026 begins, the polyester market sends an unusual signal: the 'big promotion' by polyester plants has yielded little effect, with the sales-to-production ratio hitting only 70% on June 29 and plummeting to 30% the next day. Downstream weaving mills are not only refraining from large-scale stockpiling but are even cautious about bargain hunting. This starkly contrasts with previous promotions, where sales could easily exceed 100%, marking a typical case of 'promotion fatigue' in the market.
Weakening Cost Support
The shift in the crude oil market is a key variable in this round of polyester dynamics. With the reopening of the Strait of Hormuz, stranded tankers in the Persian Gulf are gradually resuming passage, easing the energy crisis in the short term. Morgan Stanley has once again lowered its oil price forecast within about two weeks, stating that market attention has returned to global oversupply, with spot Brent crude oil averaging $75 per barrel in both Q3 and Q4. This means the pressure on polyester filament yarn costs has diminished significantly, making it difficult to replicate the 'bull run' seen in early March, where prices surged by thousands of yuan.
For polyester plants, the high-cost raw material inventory is still being digested, with POY, FDY, and DTY inventories reaching 30 days, 35.7 days, and 41.8 days respectively, and still accumulating. Weakened cost support combined with inventory pressure has squeezed the margin for price cuts, yet plants are reluctant to slash prices aggressively—since high-priced raw materials purchased earlier have yet to be fully absorbed. This dilemma leaves the market in a state of 'grinding decline' or 'waiting for a more forceful centralized sell-off.'
Demand Side: Extreme Rationality and Low Elasticity
The behavior of downstream weaving mills has fundamentally changed. Profit margins have been squeezed too thin over the past two years, drastically reducing their room for maneuver. Now, they refuse to run machines without firm orders, resulting in extremely low operating elasticity. The price elasticity of fabric is also poor, with the breakeven point between inventory and fresh gray fabric still being contested. Weaving mills only purchase raw materials when orders are confirmed, preferring to buy on dips and avoiding any large-scale aggressive stockpiling.
This extreme rationality has rendered polyester plants' promotional tactics increasingly ineffective. Even with discounts, downstream buyers 'won't even bother to look.' The market is waiting for a breakout product to break the deadlock—similar to the 'New Chinese Style' fabric that emerged last Spring Festival. In the near term, summer sun-protection clothing was seen as a potential catalyst, but heavy rainfall across China this summer has delayed the arrival of high temperatures, pushing back demand for such garments.
H2 2026: Price Elasticity Opportunity Amid Low Inventory
Despite current market weakness, industry public data reveals a noteworthy signal: both upstream and downstream players in the textile supply chain have adopted cautious stockpiling, and capacity utilization in H1 has been relatively limited. As a result, market inventories are at relatively low levels compared to the past two years. This means that once demand picks up, a short-term supply-demand mismatch could occur, restoring fabric price elasticity.
For buyers and foreign trade companies, this elasticity represents both opportunity and risk. If the 'Golden September and Silver October' season materializes as expected, or if a breakout category like 'New Chinese Style' emerges, low inventory levels will amplify price volatility, giving early movers a cost advantage. Conversely, if demand remains weak, polyester plants may be forced into more aggressive destocking, leading to periodic price declines for polyester yarn.