Polyester factories just concluded a round of promotions, but the production-to-sales ratio hovered around 70%, dropping sharply to 30% the next day. This 'promotion fatigue' signals that the upstream-downstream game has entered a rational phase—downstream buyers no longer blindly bargain-hunt but tie purchasing decisions closely to orders.
Cost Ceiling Lowers
The key variable supporting polyester prices is loosening. After the reopening of the Strait of Hormuz, stranded tankers have begun sailing out of the Persian Gulf, substantially easing the energy crisis. Morgan Stanley has again lowered its oil price forecast within about two weeks, stating that market focus has returned to global oversupply, with Q3 and Q4 Brent crude averaging $75 per barrel.
This means cost pressure on polyester filament has significantly diminished. Unlike the 'bull run' triggered by oil prices surging 50% in early March, the cost side will struggle to provide similar upward momentum. Polyester factories now face the risk of devaluation on raw material inventories built at higher costs, making them more hesitant to offer discounts.
Demand Collapse: Why Weaving Mills Aren't Buying
The behavior logic of downstream weaving mills has fundamentally changed. With profits squeezed over the past two years, their financial flexibility is severely limited, resulting in extremely low capacity elasticity—mills simply won't run without confirmed orders. Fabric price elasticity is also weak, as the breakeven point between inventory and fresh grey fabric remains in flux, giving mills no incentive to stockpile raw materials.
Polyester factory inventory pressure is escalating: POY at 30 days, FDY at 35.7 days, DTY at 41.8 days, and still accumulating. If downstream continues to hold back, polyester filament may face two paths: gradual price declines to absorb inventory, or a more aggressive clearance sale to move volume.
Low Inventories: Potential Elasticity in H2
A notable positive signal is that due to cautious stockpiling and limited capacity utilization in H1, current inventory levels across the textile chain are lower than in the past two years. This means once demand picks up, supply-demand mismatches could occur in the short term, potentially restoring fabric price elasticity.
In the near term, the market is waiting for a breakout product similar to last year's 'New Chinese-style' fabric. Summer sun-protection clothing was a candidate, but frequent heavy rains and delayed high temperatures have postponed demand. True momentum may have to wait for the traditional peak season in Q3 and Q4.
Risk Alert: Payment Safety
May and June have been tough for the textile industry. The worse the market, the higher the risks. Some companies may resort to unconventional means due to cash flow pressure. Textile professionals should closely monitor payment safety, especially during early demand recovery, and carefully vet customer credit.