With the Strait of Hormuz reopening and international oil prices rapidly falling back to pre-war levels, the polyester industry chain should have welcomed a "cost dividend." Instead, reality has become a triangular game of volume, margin, and price—upstream raw material producers push for volume, midstream filament makers defend profits, and downstream weavers wait for lower prices. The conflicting demands have led to a rare market stalemate.
Downstream: Demand for "Reasonable Prices" Amid Negative Margins
Before the oil price crash, weaving enterprises had long suffered from a situation where "flour cost more than bread." Upstream filament prices remained high, while downstream texturing and weaving orders couldn't raise prices, making spot production generally loss-making. Now that raw material costs have collapsed, downstream finally sees a glimmer of hope—but filament prices are proving remarkably resilient.
In their view, the filament sector is maintaining abnormally high processing margins, creating an unfair "upstream feasts while downstream gets lukewarm soup." Weaving enterprises are choosing to wait—they will only enter the market for restocking when filament prices "catch down" to a reasonable level. Without rational raw material costs, accepting terminal orders means losing money on every sale.
Upstream: Urging Filament Mills to Ramp Up Output
The anxiety is equally heavy in the upstream PX and PTA sectors. In July, PX and PTA plants underwent large-scale maintenance, further reducing operating rates. But looking ahead, after August, as shipping through the strait resumes and refinery maintenance ends, the raw material shortage will gradually ease.
The key question now is whether the polyester sector can raise its operating rate to match the return of raw material supply. The upstream's core demand is for filament mills to increase utilization—only then can PTA demand recover, accelerating destocking in the short term and balancing the supply-demand equation in the longer term. The most effective lever to boost filament operating rates is promotional sales. Upstream producers are eagerly waiting for filament mills to launch a major promotion—once sales volumes pick up, inventory pressure eases, giving mills confidence to raise rates, and the upstream destocking cycle can restart.
Filament Mills: Building a "Profit Wall" Through Output Cuts
The logic of filament enterprises is clear and tough: in past years, every time raw material prices fell, they would cut prices to promote sales, only to see processing margins squeezed to nothing, becoming mere "porters" for upstream producers. Now, they are determined to defend the profit floor they have painstakingly built.
Previously, running at full capacity earned 100 yuan per ton; now, running at 70% capacity earns 500 yuan per ton—the math works in their favor. If they cut prices now, not only would it trigger deeper wait-and-see behavior downstream ("If it drops today, will it drop again tomorrow?"), but it would also undo all their output reduction efforts. This tough stance has created a deadlock:
- Filament mills refuse to lower prices, downstream won't buy, and sales volumes stay low
- Low sales prevent destocking, making it impossible to raise operating rates
- Without higher filament rates, PTA sales remain sluggish, dashing upstream hopes of accelerated destocking
When Will the Stalemate Break?
Currently, no party is willing to make the first move. Downstream weavers are waiting for "catch-down" prices, filament mills are guarding their "profit fortress," and upstream producers are hoping for "volume." The key variable is: whose patience runs out first.
If oil prices stay low and downstream inventories are depleted, weavers may be forced to accept current prices, breaking the deadlock. Alternatively, if filament mills face cash flow pressure, they may be compelled to cut prices to raise funds. But for now, the determination of filament mills to maintain output cuts appears strong, and a near-term shift is unlikely.