On July 2, the average sales-to-production ratio among sampled polyester filament yarn producers fell to 31.7%, down 4.1 percentage points from the previous day. This means that for every 100 tons of yarn produced, fewer than 32 tons were actually sold, leaving nearly 70% piling up in warehouses. The striking divergence is that while the ratio keeps dropping, cash flow in the sector remains high, signaling that mills are not yet willing to cut prices despite weak demand.
The Supply-Demand Misalignment Behind High Cash Flow
High cash flow indicates that polyester filament yarn production remains profitable, so mills have no incentive to sell at a loss. But downstream buyers are clearly resisting. The data shows a wide dispersion in individual mill performance: the highest hit 70%, the lowest was zero. Over 60% of sampled mills reported ratios below 30%, and two mills recorded zero sales on that day.
This fragmentation suggests the market is not uniformly weak but instead favors a few suppliers with price advantages or long-term relationships. Most mills face a "priced out" scenario—quotations are firm, but customers are not placing orders.
The root cause of downstream resistance is straightforward: while yarn prices remain elevated due to cost-side support, fabric and garment orders have not recovered in tandem. Weaving and printing/dyeing mills are reluctant to build inventory, preferring to buy hand-to-mouth.
Ripple Effects Across the Textile Chain
Persistently low sales ratios will inevitably increase mill inventories. If the trend continues, some smaller players with tight cash flow may be forced to cut prices, breaking the current price equilibrium. For weaving mills that rely heavily on polyester filament yarn, this could mean a temporary decline in raw material costs.
However, weaving mills themselves face insufficient orders. Downstream apparel brands and foreign trade buyers remain cautious about the second-half outlook, with little appetite for restocking. Even if yarn prices soften, weavers may wait rather than buy in bulk, because end-user demand is the real driver.
Geographically, major production clusters in Shengze, Changxing, and Xiaoshan are all reporting low ratios, reflecting a broader slowdown in East China's chemical fiber industry. Downstream fabric hubs like Keqiao and Nantong also feel the chill, with greige goods moving slowly, further suppressing yarn demand.
Price Outlook and Operational Rhythm
The market is at the tail end of a cost-push rally. Crude oil remains volatile, and polyester feedstock costs are still supportive, but the upward momentum has clearly faded. Mills are caught in a dilemma: holding prices loses volume, while cutting prices squeezes margins.
Historical patterns suggest that a sales ratio below 40% for several consecutive days often signals a price inflection point. The July 2 reading of 31.7% is still declining. If the ratio fails to rebound above 40% in the coming week, a price correction is likely.
For downstream buyers, this is not an ideal time to bottom-fish, but neither should they sit idle. A staggered lock-in strategy is recommended: buy spot for urgent needs, while negotiating floating-price forward contracts with suppliers to secure capacity in case of a rebound.