As the second half of 2026 begins, the retreat of crude oil's 'bull run' is dragging the polyester chain back to rational bargaining. Morgan Stanley has twice revised its oil price forecast within two weeks, locking in Brent crude at $75 per barrel for Q3 and Q4. This signals a significant weakening of cost support for polyester filament yarn, making extreme price surges of thousands of yuan per ton, as seen in early spring, unlikely to recur.
The Fatigue Behind Promotion
On June 29, polyester plants launched another round of aggressive promotions, but the market response was tepid. The sales-to-production ratio hovered around 70% that day and slumped to approximately 30% the following day. Compared to previous rounds, where ratios easily exceeded 100% even if only for a day, even this fleeting excitement has vanished. Downstream weaving mills have adopted hyper-rational purchasing logic—no orders, no startup. They only replenish stocks at dips, with no appetite for bulk buying.
This stems from squeezed profit margins downstream. Over the past two years, fabric pricing flexibility has been severely compressed, and the break-even point between inventory greige goods and new orders remains contested. Weaving mills have limited maneuvering room and extremely low operational elasticity. Even as polyester plants offer discounts, downstream mills show little interest, leading to classic 'promotion fatigue.'
Trapped Between High Inventories and High Costs
Polyester plants face a dilemma: on one hand, they carry high-cost raw material inventories from earlier purchases, limiting their ability to cut prices; on the other hand, finished goods inventories continue to climb. As of late June, POY, FDY, and DTY inventories stood at 30 days, 35.7 days, and 41.8 days, respectively, and are still accumulating. If downstream demand remains weak, polyester filament yarn may see sustained price declines or a more aggressive clearance sale.
On the cost side, while the Middle East situation remains unresolved, the reopening of the Strait of Hormuz means stranded oil tankers are gradually departing, easing the energy crisis in the short term. Oil prices are unlikely to spike 50% within days as they did after the Spring Festival. With crude's 'ceiling' lowered, polyester filament yarn cost pressure has eased significantly, and future price volatility will depend more on supply-demand fundamentals.
Potential Elasticity from Low Inventories
Notably, both upstream and downstream players in the textile industry have adopted cautious stocking strategies. H1 capacity utilization has been limited, and overall industry inventories are relatively low compared to the past two years. This means that once demand picks up, a supply-demand mismatch could occur in the short term, restoring fabric pricing flexibility.
The market is waiting for a catalyst, likely a breakout product category like the 'New Chinese Style' fabrics seen last year. In the near term, summer sun-protection apparel was the most promising candidate, but heavy rainfall across China this summer has delayed the onset of high temperatures, postponing related demand.
Risks and Opportunities in H2
May and June were tough for textile players. The 'Golden March-April' peak season is long gone, and the 'Golden September-October' still seems distant. The worse the market, the higher the risks—especially regarding payment collection. Some companies may resort to unconventional measures to manage cash flow, warranting heightened vigilance.
Overall, the polyester chain's H2 game will revolve around three core variables: whether crude oil stabilizes in the expected $75/barrel range, whether downstream demand sees a substantive recovery, and whether polyester plants adopt more aggressive destocking strategies under high inventory pressure. For buyers, building positions during dips in a low-inventory environment may be worthwhile, but close attention to terminal order recovery is essential.