The international oil price plunged after the US-Iran peace agreement, with the Strait of Hormuz gradually resuming navigation and Brent crude oil falling back to pre-agreement levels. For the polyester industry, this should have been a major cost benefit—the upstream cost of PX and PTA was significantly reduced, theoretically able to transmit down the entire chain. However, reality has taken the opposite turn: a fierce game over 'volume, price, and profit' is quietly playing out among upstream feedstock, midstream filament yarn, and downstream weaving, with each party holding irreconcilable demands, forming a rare 'triangular deadlock.'
The 'Triangular Demands' After Cost Collapse
The anxiety of the upstream feedstock sector (PX/PTA) is most acute. In July, PX and PTA plants underwent large-scale maintenance, further reducing operating rates. But looking ahead to August and beyond, as Strait shipping resumes and refinery maintenance ends, the feedstock supply shortage will gradually ease. The core demand of the feedstock sector is: filament yarn companies must increase operating rates. Only when filament yarn loads rise can PTA's direct demand recover, enabling faster destocking in the short term and balance sheet repair in the long term. The most effective lever to get filament yarn to raise loads is promotional volume—if filament yarn companies launch a big promotion, sales volume surges, inventory pressure eases, and they have the confidence to raise loads, thus reviving the feedstock destocking pace.
Midstream filament yarn companies operate on a completely different logic. In past years, every time feedstock prices fell, filament yarn would cut prices to promote sales, squeezing processing margins to the bone and turning themselves into mere 'porters' for upstream. Now, filament yarn companies seem determined to protect the profit floor they have painstakingly built: previously, running at full capacity earned 100 yuan per ton; now, running at only 70% capacity earns 500 yuan per ton—a much more attractive economic proposition. If they cut prices now, it would not only trigger deeper wait-and-see behavior downstream ('If it can drop today, can it drop again tomorrow?'), but also nullify all previous output reduction efforts.
The downstream weaving sector is the hardest hit by 'losing money on every order.' Before the oil price crash, terminal weaving companies suffered from the 'flour more expensive than bread' dilemma—upstream filament yarn prices were high, but downstream texturing and weaving orders could not raise prices, with immediate production generally running at a loss. Now that oil prices have collapsed and polyester feedstock costs have fallen sharply, downstream finally sees a glimmer of relief. But they are angered that filament yarn prices have proven very resilient. In their view, the current ultra-high processing margins at the filament yarn stage are unreasonable—a situation where 'upstream eats meat while downstream gets only scalding soup' must change. Downstream is waiting for filament yarn prices to 'catch down' to a reasonable level before entering the market to restock.
The 'Death Spiral' Under Deadlock
The three parties' demands form a classic 'impossible triangle': upstream wants 'volume,' midstream wants 'profit,' and downstream wants 'price.' Achieving the desires of upstream and downstream seems to come at the expense of midstream; conversely, realizing midstream's desires sacrifices the interests of both upstream and downstream.
This stalemate is triggering a dangerous 'death spiral': filament yarn refuses to cut prices significantly, so downstream stays out, and sales volume fails to pick up; without sales, filament yarn inventories cannot decline, making load increases impossible; without filament yarn load increases, PTA from upstream cannot sell, preventing upstream from accelerating destocking.
For buyers, this means the current raw material procurement window is extremely delicate. Buying now risks high filament yarn prices; waiting risks missing the bottom if filament yarn suddenly launches a promotional price cut. More critically, if filament yarn companies choose to 'tough it out,' downstream weaving plant shutdown rates may rise further, eventually forcing filament yarn to cut prices—but the time cost of this process could be fatal for small weavers with short order cycles and tight cash flows.
Possible Paths to Break the Deadlock
Historically, chain deadlocks are broken in two ways: an external variable (e.g., a sudden demand surge forcing all links to raise loads) or when one link's inventory or financial pressure reaches a tipping point, forcing a voluntary concession.
Currently, terminal demand shows no clear recovery signal, and foreign trade orders remain uncertain due to geopolitical fluctuations. Thus, the second path is more likely. Although filament yarn companies enjoy high margins, hidden costs like fixed-cost allocation from output cuts, inventory depreciation risk, and market share erosion are significant. Once filament yarn inventories hit a critical threshold (e.g., over 30 days), companies will be forced to launch promotions, potentially triggering a 'price stampede'—downstream buys the dip, upstream demand recovers, and the chain enters a new equilibrium.
For the feedstock sector, the PX and PTA maintenance season is ending, and supply recovery from August is a certainty. If filament yarn companies do not proactively release volume before then, feedstock inventory pressure will drive PTA prices lower, potentially collapsing the filament yarn 'profit fortress'—because falling feedstock costs compress the absolute space for filament yarn processing margins.