Polyester Market Faces 'Promotion Fatigue' and High Inventory, Price Elasticity in H2 Could Be Key to Breakthrough

In late June 2026, polyester factory promotions faced unprecedented cold reception. On June 29, a major promotion yielded only 70% production-sales ratio, plummeting to 30% the next day. This starkly contrasts with past 'one-day' promotions that easily exceeded 100%, signaling clear 'promotion fatigue'—polyester mills cut prices, but downstream weaving mills showed minimal interest, only making small purchases.

Weakening Cost Support, Oil Price Forecast Lowered

Pressure on polyester costs is systematically declining. While the Middle East situation hasn't fully settled, the Strait of Hormuz blockade has been lifted, and stranded tankers are resuming passage, easing short-term energy crises. Oil prices are unlikely to repeat the extreme 50% surge seen after the Spring Festival. Morgan Stanley revised its oil price forecast downward within two weeks, setting Q3 and Q4 Brent crude average expectations at $75/barrel. This means the cost 'ceiling' for polyester filament yarn has significantly lowered, making the cost-driven 'crazy bull' market of early March unlikely to recur in the near term.

Demand 'Collapse', Extreme Rationality Downstream

Demand-side weakness is deeper. Downstream weaving mills have entered an ultra-rational mode: no orders, no production. Profit margins have been squeezed over the past two fiscal years, severely limiting cash flow flexibility and leaving near-zero elasticity in production starts. Price elasticity in the fabric market is equally poor, with a fierce tug-of-war between inventory fabric and fresh fabric breakeven points. This cautious 'wait-and-see' mentality means even significant price cuts by polyester mills struggle to stimulate downstream buying.

High Inventory, Polyester Mills in a Dilemma

Polyester mills face an awkward situation. On one hand, raw material inventory costs are high, limiting room for price cuts. On the other, finished product inventories keep rising. Industry data shows POY, FDY, and DTY inventory days at 30, 35.7, and 41.8 respectively, still accumulating. If downstream remains unresponsive, inventory pressure will intensify. Industry analysts see two possible price paths for polyester filament yarn: either a continuous gradual decline, or a more aggressive concentrated sell-off at a certain point, the latter potentially triggering sharper short-term volatility.

Key to H2 Market Recovery: Low Inventory and Supply-Demand Mismatch

Despite the gloomy near-term outlook, opportunities exist. Currently, the entire textile supply chain—from upstream to downstream—is cautious with stockpiling, with limited capacity utilization in H1. This means circulating inventory is relatively low compared to the past two years. Should demand pick up in H2—driven by blockbuster products like last year's 'New Chinese Style' fabrics or this year's summer sun-protection clothing—the market could see a rapid supply-demand mismatch, restoring price elasticity in fabrics.

Practical Recommendations

For Buyers - With high polyester mill inventories, bargaining power is strong. Consider phased, low-price purchases but avoid bulk hoarding to mitigate risks of continued price declines. - Monitor signals of potential blockbuster orders like sun-protection fabrics in H2; once demand picks up, price elasticity may emerge quickly—lock in low-cost sources early. - Be cautious about payment safety; strengthen risk controls for orders with long credit terms to avoid bad debts from downstream cash flow issues.

For Foreign Trade Companies - With oil price expectations falling to $75/barrel, polyester cost pressures ease. Communicate stable pricing signals to overseas clients to secure more long-term contracts. - Monitor ongoing Middle East risks; although the Strait of Hormuz is reopened, geopolitical risks remain. Include price adjustment clauses in contracts. - Leverage the current low inventory environment to promote 'fast-response' supply chain advantages in overseas markets, preparing for potential concentrated order releases in Q3.