Crude oil prices fell below $70 per barrel on June 24, returning to pre-Middle East crisis levels. Yet polyester filament prices remain nearly $1,000 per ton higher than before the crisis. This gap is not a simple cost pass-through but a pricing power tug-of-war between upstream and downstream players in a weak-demand environment.
The Structural Contradiction Behind the Price Gap
WTI crude briefly broke below $70 on June 24, rebounded slightly on June 25 due to renewed Middle East tensions, and hovered near $70 again on June 26. While PTA and ethylene glycol futures have essentially returned to pre-crisis levels, spot polyester filament prices remain about 1,000 yuan ($140) per ton higher.
This gap has inflated polyester filament's cash margin. Industry data shows POY inventory at 30 days, FDY at 35.7 days, and DTY at 41.8 days. High inventory means production costs were locked in at higher levels; cutting prices now would turn paper losses into real ones. So polyester plants prefer a 'slow decline, slow sale' approach rather than a one-time big cut.
Weavers' 'Buy Only When Necessary' Mentality
For downstream weavers, the high cash margin signals further price declines ahead. If orders are not urgent, delaying purchases by a month can save hundreds or even thousands of yuan per ton in raw material costs, while the final product remains identical. As a result, weavers have entered a 'non-essential, no buy' mode, maintaining only minimum procurement for immediate needs.
This mentality is reflected in data: on June 24, domestic direct-spun polyester filament capacity utilization was 73.81%, up 0.29% from the prior week, but still near a three-year low. Low operating rates should help control inventory, but the crude oil crash removed any rationale for price hikes. Some polyester plants cut prices by 50-150 yuan per ton on June 24, but weavers still consider that insufficient.
Root Cause: Supply Outweighs Demand
The core issue is supply exceeding demand, with weak domestic consumption. Summer is typically peak season for sun-protection fabrics, but unusually cool weather this year has delayed the seasonal uptick. Meanwhile, overall domestic consumer spending remains sluggish, limiting terminal garment orders.
However, not all is bleak. With the Strait of Hormuz shipping channel fully reopened, global crude and commodity trade is normalizing. Multiple overseas economies are accelerating their recovery, which should boost international textile demand. Export orders could partially offset weak domestic demand, providing some support for the polyester market.
Near-Term Outlook: Stalemate to Persist
In the short term, the weak-supply, strong-demand, high-cash-margin pattern will persist. Polyester plants are underpinned by high inventory costs and won't slash prices aggressively; weavers, expecting further price drops, won't stock up hastily. The tug-of-war will continue, with polyester filament prices likely drifting down slowly toward cost levels.