On July 1, the average sales-to-output ratio of polyester filament yarn (PFY) among sample enterprises fell to 35.8%, down 3 percentage points from the previous trading day. This figure not only marks a recent low but also signals an early arrival of the traditional off-season in the textile industry.
Behind the Sales Data
Among the 23 sample enterprises, only three reported a sales-to-output ratio above 60%, while 12 had ratios below 30%, including two with zero sales. This polarized and generally weak pattern indicates that downstream fabric mills are not completely without orders but have adopted an extreme wait-and-see approach amid price negotiations.
PFY producers have adjusted official list prices but kept actual transaction prices stable, avoiding large-scale discount promotions. This reflects that upstream polyester plants still have cost support—crude oil prices, though lacking upward momentum, have not collapsed, and spot prices of PTA and MEG remain within certain ranges. However, downstream users' resistance to current price levels has accumulated to a critical point, preferring to cut production or consume inventories rather than chase higher prices.
Early Off-Season Effect: From 'Buying on Rising' to 'Afraid to Buy on Falling'
July is traditionally a slow season for textiles, but the sales ratio usually does not drop sharply until mid-month. This year, starting from day one, the ratio fell below 36%, indicating that the off-season effect has arrived early. The deeper reason lies in the dual pressure of insufficient orders and high inventories faced by downstream fabric mills, coupled with tight cash flow, making them unable to bear the risk of raw material price fluctuations.
From an industry chain perspective, when the PFY sales-to-output ratio remains below 40% for consecutive days, two chain reactions typically occur: first, polyester plants are forced to cut production to ease supply pressure; second, traders start selling at lower prices, accelerating price declines. Currently, we are in the first phase, but if the ratio fails to recover above 50% in the coming week, the risk of the second phase will increase significantly.
Crude Oil and Middle East: External Variables Still in Play
Externally, repeated Middle East tensions have not sustained upward momentum for crude oil. The market's digestion of geopolitical premiums has become dull, with oil oscillating in a narrow range of $70-75 per barrel. For the chemical fiber industry, this means cost support is weakening, though a collapse is not imminent.
Notably, the extreme heatwave in India poses potential long-term shocks to the global textile supply chain. A study predicts that India's textile industry could lose 34 million jobs by 2030, accelerating the shift of orders to China, Vietnam, and Bangladesh. In the short term, India's summer production cuts may create a window for Chinese PFY exports, but this contradicts the current domestic sales slump—suggesting that export demand is insufficient to offset weak domestic demand.
Strategic Adjustments Amid Price Tug-of-War
The current standoff between upstream and downstream in the chemical fiber chain cannot last indefinitely. The most likely trigger for a breakout is supply-side adjustments—specifically, the scale of production cuts by polyester plants.
Historical patterns show that when the sales ratio stays below 40% for five consecutive trading days, polyester plants typically increase production cuts from 10% to 20-30%. Only then will social inventories of PFY decline substantially, allowing prices to stabilize. Until then, the buyer's market will persist.