Polyester POY Prices Hit New Lows: Overcapacity and Weak Demand Weigh Heavy

Polyester POY (150D/48F semi-dull) prices dropped to 8050-8200 yuan/ton on July 3, 2026, hitting a new low for the year. This marks a deep adjustment in the chemical fiber upstream, driven by overcapacity and weak demand.

Price Signals: Regional Divergence and Cost Inversion

Rongsheng Petrochemical quoted 8200 yuan/ton in Hangzhou, while Juxing Chemical in Shaoxing offered 8050 yuan/ton, a 150 yuan spread. This reflects different inventory pressures and cash flow needs. Juxing's lower price suggests aggressive destocking by smaller players. At 8200 yuan/ton, processing margins are squeezed to near breakeven, with some firms making less than 200 yuan per ton. Further declines could force high-cost capacity to shut down.

Industry Transmission: Weaving Utilization Falls

Demand weakness is the root cause. In the first half of 2026, weaving utilization in Jiangsu and Zhejiang fell from 75% in January to 62% in June, a three-year low. Apparel orders shifting to Southeast Asia and sluggish domestic consumption have left fabric inventories high. Mills now buy POY on a hand-to-mouth basis, avoiding stockpiling. Industry data shows June POY sales-to-output ratio was only 75%-80%, down 12 percentage points year-on-year, with inventory days rising to 18-22.

Supply-Demand Imbalance: Cost of New Capacity

From late 2025 to mid-2026, China added 1.8 million tons of new POY capacity, mainly in Zhejiang, Jiangsu, and Fujian. Total capacity surpassed 12 million tons per year, while demand grew only 3%-4%. This mismatch has triggered price wars. Large integrated firms barely maintain margins, but small plants in Shaoxing and Xiaoshan have started cutting output or switching to differentiated products like cationic or flame-retardant POY.

Outlook: Bottom Unclear, Volatility Continues

Short-term rebound lacks support. Low crude oil prices may further ease raw material costs, and July-August is a traditional slack season, with weaving utilization expected to drop to 55%-60%. Polyester plants may continue price cuts to destock, but with limited effect. However, some plants are planning joint output cuts. If 10%-15% cuts materialize by mid-July, prices could stabilize. Also, RMB exchange rate fluctuations might bring back some export orders, providing slight support.

Practical Advice

For Buyers - Current prices are low but not at bottom. Buy on demand to avoid inventory risk. - Monitor regional spreads; prioritize low-priced supply from competitive areas like Shaoxing, factoring in freight. - Negotiate short-term floating price contracts to lock in current low prices while allowing downward adjustments.

For Mills (Chemical Fiber Producers) - Shift from commodity POY to differentiated products (e.g., micro-denier, cationic, antimicrobial) to improve margins. - Establish "processing + volume lock" partnerships with weavers to hedge price volatility through stable orders. - Participate in joint output cuts to avoid destructive price wars, provided inventory pressure is manageable.