Halfway through 2026, the polyester industry chain has left the "golden March and silver April" behind, with the "golden September and silver October" still distant. The most notable characteristic of the current market is a paradox: upstream cost support is weakening, downstream purchasing intent is frozen, intermediate inventories are high, yet overall industry inventories are at historical lows. Under this contradictory pattern, the fate of H2 hinges on one key variable—when a breakout product category emerges on the demand side.
Cost Side: Oil Price Retreat Removes "Bull Run" Fuel
Morgan Stanley has cut its oil price forecast twice in two weeks, now expecting Brent crude to average $75/barrel in Q3 and Q4. The judgment is based on the reopening of the Strait of Hormuz, allowing stranded tankers to depart and alleviating short-term energy crisis. International oil prices are unlikely to repeat the extreme surge of over 50% within days seen after the Spring Festival.
For the polyester chain, this means significantly reduced cost pressure on polyester filament yarn. The "bull run" of early March, when raw material prices jumped thousands of yuan, is unlikely to return soon. The lower oil price ceiling directly undermines polyester mills' ability to maintain high prices and shifts the balance of power in the upstream-downstream game.
Demand Side: Promotion Fatigue Spreads, Weavers Vote with Their Feet
On June 29, polyester mills launched another major promotion, but sales reached only about 70% of capacity that day, dropping to 30% the next day. Compared to previous rounds that at least briefly exceeded 100%, the market has clearly entered "promotion fatigue." Downstream weaving mills have fundamentally changed their procurement logic: no orders means no production, only small replenishments at low prices, with zero appetite for large-scale stocking.
This rational, even conservative behavior stems from severely squeezed profit margins over the past two years, leaving companies with little room to maneuver. Fabric price elasticity is extremely poor, and the breakeven point between inventory grey fabric and fresh grey fabric remains contested. Weaving mill operating rates show minimal elasticity, making them almost immune to polyester mills' price concessions.
Inventory Dilemma: Polyester Mills Face Dual Pressure of High Costs and High Inventories
As of late June, polyester mills' inventories of POY, FDY, and DTY stood at 30 days, 35.7 days, and 41.8 days respectively, and are still accumulating. Meanwhile, mills purchased raw materials at high costs earlier, limiting their room to cut prices. If downstream continues to hold back, polyester filament may face two paths: sustained gradual decline, or one massive clearance sale.
Notably, while polyester mills themselves hold high inventories, the entire supply chain—upstream and downstream—has stockpiled cautiously. With limited capacity utilization in H1, overall industry inventories are actually lower than the past two years. This means that once demand recovers, a supply-demand mismatch could quickly form, restoring fabric price elasticity.
Catalyst for Recovery: Waiting for the Next "New Chinese Style"
The market is not without hope. Last Spring Festival's "New Chinese Style" fabric explosion demonstrated how a breakout category can drive the entire chain. Currently, the most likely candidate is summer sun-protection apparel, but this year's frequent heavy rainfall in China has delayed high temperatures and suppressed demand.
A more realistic window opens in H2. As inventories digest and policy stimuli accumulate, if a breakout category emerges—similar to "New Chinese Style"—it could effectively activate weaving mills' procurement intent and drive polyester sales. At that point, today's low inventory base would become the foundation for price elasticity.
Risk Alert: Tougher Markets Demand Closer Payment Monitoring
May and June have been tough for textile players. In a downturn, market risks often cluster, with some firms resorting to unconventional methods to maintain cash flow. Textile professionals must heighten vigilance, focusing on payment safety to avoid bad debts before the market recovers.