When international crude oil fell below $70 per barrel on June 24, erasing all gains from the Middle East crisis, the polyester filament yarn market surprisingly did not follow. Industry data shows that as of June 26, average polyester filament yarn prices remain nearly 1,000 yuan per ton higher than pre-crisis levels. This divergence is no accident; it reflects a tug-of-war between upstream and downstream players, inventory costs, and market expectations.
Why Oil and Polyester Have Decoupled
Crude oil is the fundamental raw material for the polyester chain, and its price movements typically transmit to polyester filament within days. But this time, transmission has been blocked. From the futures side, PTA and MEG have essentially returned to pre-crisis levels, theoretically removing cost support for polyester filament. Yet polyester mills have not cut prices aggressively. The reason lies in their high-cost inventory: POY plant inventory stands at about 30 days, FDY at 35.7 days, and DTY at 41.8 days. A price cut now would turn paper losses into realized losses, a costly move given current low operating rates of 73.81%.
Meanwhile, weavers are doing their own math. They see the high cash margin on polyester filament as a signal that further price declines are likely. Unless they have firm orders to fulfill, buying for inventory could mean paying hundreds or even thousands of yuan more per ton just a month later. This "buy only when necessary" mentality has slowed downstream procurement, adding to polyester mills' destocking pressure.
Structural Imbalance at the Core
Supply-demand imbalance is the root cause of this divergence. Although the 73.81% operating rate is a three-year low, it has not alleviated the mismatch because demand has contracted even more sharply. Unusually cool summer weather has delayed the start of seasonal demand for sun-protective clothing, highlighting the weakness in domestic consumption. This is not a short-term fluctuation but a reflection of structural adjustments in China's consumer market.
However, external conditions are improving. With the Strait of Hormuz fully reopened, global crude and commodity trade is normalizing, and several overseas economies are accelerating their recovery. This trend is expected to boost international textile demand, providing support for Chinese textile exports. Increased export orders could partially offset domestic weakness and ease downward pressure on polyester filament.
The Stalemate and Potential Breakthroughs
In the near term, the pattern of weak supply-demand and wide price spreads will persist. Polyester mills' strategy of "slow price cuts, slow sales" is a rational choice to maintain cash flow at low operating rates. Weavers' wait-and-see approach reflects rational expectations of further price declines. The stalemate will break only when inventory is digested or demand recovers.
Key variables to watch: first, further moves in crude oil—sustained prices below $70 will weaken polyester's cost support; second, inventory changes at polyester mills—if pressure builds, phased price cuts may emerge; third, actual export order arrivals, which represent the most likely external force to break the deadlock.