The international oil price collapsed after the Iran-US peace deal and the reopening of the Strait of Hormuz, with crude falling back to pre-war levels. However, for the polyester chain, this seemingly beneficial 'cost collapse' has not brought a win-win situation. Instead, a fierce three-way game over volume, price, and profit is unfolding among upstream raw materials, midstream filament, and downstream weaving.
Three Demands, Three Conflicts
Each link in the chain holds conflicting demands. Upstream PX and PTA producers want filament makers to raise operating rates, as only then can direct demand for PTA recover, accelerating destocking and restoring the forward balance sheet. Downstream weavers, meanwhile, have long suffered from 'flour costing more than bread'—before the oil crash, high filament prices combined with inability to raise fabric prices meant losses on each order. Now that raw material costs have plunged, weavers expect filament prices to 'catch down' to a reasonable level before they will enter the market to restock.
Midstream filament producers, however, operate on a different logic. In past years, each time raw materials fell, they cut prices to boost sales, only to see processing margins squeezed to nothing, becoming mere 'porters' for upstream. Now they are determined to defend their hard-won profit base: running at 70% capacity and earning 500 yuan per ton is far better than full capacity at 100 yuan per ton. Cutting prices now would trigger deeper waiting among buyers ('if it drops today, will it drop again tomorrow?') and undo all their production-cut efforts.
The Standoff: Output Cuts as a Sword
Filament makers have used output cuts as a 'sharp sword' to choke both upstream and downstream. Upstream players eagerly await a major filament promotion—if sales surge, inventory pressure eases, giving filament firms the confidence to raise operating rates, which in turn would revive upstream destocking. Downstream weavers wait for filament prices to fall to a reasonable level before buying. This tough stance has created a deadlock: filament makers refuse to cut prices significantly, weavers refuse to buy, sales remain sluggish, inventories fail to clear, operating rates stay low, and upstream PTA sales stagnate.
According to industry data, PX and PTA plants underwent major maintenance in July, further lowering operating rates. Looking ahead to August and beyond, as strait shipping recovers and refinery maintenance ends, the raw material shortage may gradually ease. The key variable will be whether the polyester end can raise output to match the returning supply. For now, no side is willing to make the first move. The deadlock will break only when one side can no longer bear the pressure.
Impact on Industrial Clusters and Trade
This standoff has deep implications for major textile clusters. In key polyester filament hubs like Shaoxing, Xiaoshan, and Shengze, inventory pressure is building. If output cuts persist, filament prices may rise further, squeezing downstream weavers' margins. For export-oriented weavers, especially in Nantong and Keqiao producing home textiles and apparel fabrics, high raw material costs weaken their international price competitiveness. According to China Customs data, textile and apparel export growth has already slowed this year; unresolved raw material cost issues could lead to further order losses.