In July 2025, international oil prices plunged sharply following the US-Iran peace agreement and the reopening of the Strait of Hormuz, causing a collapse in upstream feedstock costs for the polyester industry chain. However, this seemingly beneficial change unexpectedly ignited a fierce tripartite game among upstream, midstream, and downstream players. China Customs and industry data show that PX and PTA plant maintenance expanded in July, with operating rates falling again, while polyester filament producers actively cut production to maintain processing margins. Downstream weaving mills, burdened by high filament costs, are generally in a loss-making state. The conflicting demands of the three parties have created a rare stalemate in the chain.
Misaligned Interests After Cost Collapse
The oil price drop should have transmitted through the entire polyester chain, but in reality, the cost reduction benefits have been intercepted by the midstream filament segment. The anxiety at the upstream feedstock end (PX, PTA) lies in the fact that with the resumption of Strait shipping and the end of refinery maintenance after August, feedstock supply will gradually loosen. The most urgent task now is to push polyester plants to raise operating rates to match the return of future feedstock supply. However, downstream weavers are refusing to restock because filament prices remain stubbornly high. Industry data show that before the oil price crash, weaving mills had long suffered from 'flour being more expensive than bread'—high filament prices, while end-order prices for texturing and weaving could not be raised, leading to widespread losses on spot production. Now that costs have collapsed, downstream naturally expects filament prices to 'catch down' to a reasonable level; otherwise, taking orders means losing money.
Filament Production Cuts: A Double-Edged Sword
The strategy of midstream filament producers is clear and tough: lock in processing profits through production cuts. In past years, whenever they followed feedstock price cuts with promotions, processing fees were quickly squeezed, turning them into mere 'porters' for upstream. Now, they choose to run at 70% capacity, boosting per-ton profit from 100 yuan to 500 yuan. While seemingly shrewd, this strategy leads to a sales stalemate: filament producers refuse to lower prices, downstream continues to wait, sales volumes cannot pick up; inventory remains high, making it impossible to raise operating rates. Consequently, upstream PTA sales are also blocked, disrupting the destocking pace. The filament producers' production cuts essentially build their profits at the expense of upstream and downstream, but the sustainability of this strategy is being tested.
Downstream's 'Reasonable' Cry and Upstream's Wait
The downstream weaving sector's demand is the most direct: they want filament prices to return to a reasonable level. In their view, the current ultra-high processing margins in the filament segment are squeezing downstream profits, making the situation of 'upstream eating meat, downstream only getting hot soup' unreasonable. Thus, downstream chooses to wait until filament prices 'catch down' enough to cover order costs before entering the market to restock. Meanwhile, upstream feedstock producers are eagerly hoping for filament companies to launch a big promotion to trigger sales volume, thereby pushing filament to raise operating rates. The three parties' demands are mutually exclusive: the wishes of upstream and downstream seem to come at the expense of the filament segment, and vice versa.
When Will the Stalemate Break?
The current game in the polyester chain has reached a zero-sum state, with no party willing to make the first move. The key to breaking the deadlock may come from two directions: first, a genuine recovery in end-user demand—if textile and apparel export data or domestic orders show unexpected growth, downstream will have to accept current prices, breaking the wait; second, filament producers reaching a critical inventory pressure point, forcing them to cut prices and promote, but this would sacrifice their hard-built profit fortress. Historically, such stalemates end with one party compromising, but the complexity this time lies in the relatively balanced power among the three parties, with no clear policy or external intervention. Textile Circle believes that in the short term, the chain may continue to struggle in the quagmire of 'low sales, high inventory' until a new round of end-user orders arrives.