Crude oil prices briefly dipped below $70 per barrel on June 24, returning to pre-Middle East crisis levels, yet the polyester filament market has not followed suit. According to industry data, current polyester filament yarn prices remain nearly 1,000 yuan per ton above pre-crisis levels, even though PTA and MEG futures have essentially erased all gains. This price gap signals a deep tug-of-war along the supply chain.
Raw Materials Retreat, Polyester Cash Margins Swell
On the futures side, PTA and MEG have nearly returned to their starting points, meaning that theoretical cash margins for polyester filament yarn are at multi-year highs. At current raw material costs, polyester mills enjoy impressive paper profits. However, this high margin has not translated into market benefits; instead, it has become the core reason for weavers to hold back.
For weavers, inflated polyester prices imply significant downside potential. If they delay purchasing for just one month to replenish routine inventory rather than fill urgent orders, the cost difference per ton of raw material could be hundreds or even thousands of yuan, while the final product price remains unchanged. Consequently, a 'no purchase unless necessary' mentality is spreading, and procurement has been deliberately slowed.
Polyester Mills Caught in Inventory Trap, Reluctant to Cut Prices
Despite healthy paper margins, polyester mills face a real dilemma: the production cost of their current inventory is high. Industry data shows POY mill inventory at 30 days, FDY at about 35.7 days, and DTY as high as 41.8 days. This inventory was produced when raw material prices were elevated. Aggressive price cuts now would turn unrealized losses into realized ones.
With plant utilization already at a three-year low (direct-spun polyester filament yarn capacity utilization around 73.81%), mills feel little urgency to sell. They prefer a strategy of 'slow price cuts, slow sales' to buy time and digest high-cost inventory. This causes polyester yarn prices to decline much more slowly than raw materials, keeping the price gap wide in the near term.
Demand Side: Weak Domestic Consumption Meets Abnormal Weather
Oversupply and weak demand are the root causes of the current market divergence, with insufficient domestic demand being the core pain point. Typically, by late June, demand for sun-protection fabrics is already strong. However, unusually cool weather this year, with no heatwave approaching July, has delayed the seasonal uptick. This directly suppresses weavers' order volumes and purchasing appetite.
Macroeconomic data indicates that the recovery of domestic consumer spending has fallen short of expectations, with overall textile end-use demand remaining weak. Rising finished product inventories at weaving mills further reduce their incentive to replenish raw materials.
Exports Offer a Temporary Buffer
Still, the market is not without bright spots. With the Strait of Hormuz shipping channel fully reopened, global crude oil and commodity trade flows are gradually normalizing. Faster economic recovery in several overseas economies could boost international textile consumption demand.
For Chinese textile exporters, this means incremental external demand may partially offset domestic weakness. If export orders continue to improve, they could help alleviate downward pressure on the polyester yarn market and provide breathing room for the entire supply chain.
Near-Term Outlook: Weak Supply-Demand Balance and Wide Price Gap to Persist
In summary, the 'weak supply-demand, wide price gap' pattern in the polyester chain is expected to continue in the near term. The tug-of-war between upstream and downstream players will dominate market direction: polyester mills are unwilling to cut prices proactively, while weavers refuse to buy at elevated levels. Both sides are waiting for the other to blink first.
For market participants, closely monitoring international oil price trends, polyester mill operating rates, and the sustainability of export orders will be key to predicting the next price move.