International oil prices fell significantly following the US-Iran peace agreement and the reopening of the Strait of Hormuz. The market expected a cost dividend for the polyester chain, but upstream, midstream, and downstream players have instead entered a fierce standoff. China Customs data shows that PX and PTA plant maintenance expanded in July, further lowering operating rates, but supply pressure looms ahead. The core contradiction is that midstream filament producers are using production cuts to lock in processing margins, frustrating both upstream and downstream.
Triangular Game: Mismatch of Volume, Price, and Profit
Upstream anxiety is most acute. PTA producers face high inventories and the return of supply after maintenance. Industry data indicates PTA operating rates hit year-to-date lows in July, but after August, as Strait shipping recovers and refinery maintenance ends, feedstock shortages will ease. The upstream’s core demand is for filament plants to raise operating rates to absorb PTA inventory and repair the forward balance sheet. The only lever to boost filament runs is promotional volume—i.e., price cuts to stimulate buying.
Downstream weavers are equally distressed. Before the oil price crash, filament prices were high, and downstream texturing and weaving orders could not raise prices, leading to losses on spot purchases. Now that costs have collapsed, filament prices are stubbornly high, with processing margins elevated. Weavers view this as unjust—"upstream feasts while downstream gets scalding soup"—and are collectively waiting for filament prices to "catch down" to reasonable levels before restocking. Without fair raw material costs, taking orders means losing money.
Midstream filament producers operate on a different logic. After years of price cuts following raw material drops that squeezed processing fees, they are determined to defend margins. Their current strategy is to cut output to preserve profit: run at 70% capacity and earn RMB 500 per ton, rather than full capacity at RMB 100 per ton. They fear that any price concession would trigger deeper waiting from downstream ("if it drops today, it could drop tomorrow"), wasting their production cut efforts. This creates a closed-loop deadlock: no filament price cut → no downstream buying → low sales → filament inventory rises → no operating rate increase → PTA sales slump.
Industry Impact: Pressure on Export Orders and Inventory Cycles
This deadlock directly impacts textile exporters. Weaving mills, facing high raw material costs, are cautious in taking orders, disrupting the transmission of export demand. Some mills have extended holidays or reduced run rates to avoid losses. Meanwhile, filament inventory accumulation forces plants to limit production, further depressing upstream demand. In key industrial clusters like Shengze, Changxing, and Xiaoshao, weaving operating rates have begun to decline.
From a price expectation perspective, filament prices are unlikely to ease significantly in the near term. The strategy of maintaining margins via production cuts may persist for weeks unless upstream and downstream forces align. However, the medium-term risk is that if downstream stays out of the market, filament inventory may breach safety levels, forcing a price cut. Once filament volumes pick up, PTA demand recovers, and upstream prices may rebound, eroding downstream margins.