Crude oil has given back all its geopolitical gains, yet polyester filament yarn still carries a nearly $140 per tonne war premium. On June 24, WTI crude briefly broke below $70/barrel, returning to levels seen before the Middle East crisis escalated. Despite a modest rebound on June 25 due to renewed geopolitical tensions, oil hovered near $70 again on June 26. Meanwhile, polyester filament yarn prices remain about 1,000 yuan per tonne above pre-crisis levels, while PTA and MEG futures have largely returned to their starting points.
This price gap is not a delayed cost pass-through, but rather a deep-seated standoff between upstream and downstream players over inventory costs and purchasing expectations.
Raw materials back to baseline, why polyester lags
On the futures side, PTA and MEG have fallen back to pre-crisis levels, theoretically stripping away much of the cost support for polyester filament. Yet the reality for polyester mills is far more complex. Industry data shows current inventory levels: POY at 30 days, FDY at 35.7 days, and DTY as high as 41.8 days. These stocks were produced when raw material costs were high; a sharp price cut would turn unrealized losses into realized ones.
With capacity utilization at just 73.81%—near a three-year low—polyester mills face little urgency to destock. Data from Longzhong shows that direct-spun polyester filament capacity utilization actually rose 0.29% week-on-week on June 24, suggesting that production cuts are not being aggressively enforced. The mills' strategy is to lower prices gradually, selling slowly to avoid crystallizing losses.
Weavers adopt 'buy only when necessary' stance
For weaving mills, the high cash margin on polyester filament signals ample room for further price declines. The logic is straightforward: unless they have orders to fulfill, buying raw materials just to build inventory risks a cost disadvantage of several hundred yuan per tonne within a month—for identical finished goods.
This expectation has pushed weavers into a 'buy only when necessary' mode. Some polyester mills cut prices by 50–150 yuan/tonne on June 24, but weavers see these reductions as insufficient. The divergence in price expectations between supply and demand sides has suppressed market transactions.
Weak demand is the root cause
The core issue is insufficient end-user demand. Summer is typically peak season for sun-protection fabrics, but unseasonably cool weather has delayed order placements. Weak domestic demand directly curbs weavers' purchasing appetite and operating rates.
However, there are bright spots. With the Strait of Hormuz shipping channel fully reopened, global crude and commodity trade is normalizing. Faster economic recovery in several overseas economies could boost international textile consumption, with export orders potentially offsetting some domestic weakness and supporting the polyester filament market.
Near-term outlook: standoff continues
In the short term, the polyester chain will likely maintain a pattern of weak supply-demand balance and high price spreads. Polyester mills and weavers are entrenched in their positions, each waiting for the other to blink. Key signals to watch include: the actual implementation of production cuts by major polyester groups, the pace of end-order recovery, and whether crude oil prices can stabilize effectively.