International oil prices have plunged after the US-Iran peace agreement, and the Strait of Hormuz is gradually reopening to navigation, with crude prices falling back to pre-conflict levels. This shift theoretically should benefit the entire polyester chain, but reality tells a different story: the cost collapse has not created a win-win situation, but instead ignited a fierce three-way game over volume, price, and profit.
Currently, the demands of the three parties—upstream raw materials (PX/PTA), midstream polyester filament yarn, and downstream weaving—are completely misaligned. Upstream wants filament yarn producers to raise operating rates to absorb PTA inventory; midstream insists on production cuts to protect profits and refuses to lower prices; downstream waits for filament yarn prices to "catch down" to reasonable levels before restocking. The three are locked in a causal loop.
Upstream Anxiety: Waiting for Filament to 'Move'
In July, PX and PTA plants underwent intensive maintenance, further reducing operating rates. This short-term cut had supported raw material prices in June, but as August approaches, the market expects that after shipping resumes through the Strait and refinery maintenance ends, the raw material shortage will gradually ease. By then, whether polyester production can increase to match the return of raw material supply will be key to the PTA market balance.
The core demand of the upstream is clear: filament yarn producers must raise operating rates. Only with higher filament yarn loads can direct PTA demand recover, accelerate short-term destocking, and repair the long-term supply-demand balance. The most effective lever to boost filament yarn loads is promotional volume—i.e., sharp price cuts to stimulate downstream buying. Upstream is eagerly hoping for a major promotion from filament yarn makers. Only when sales volumes surge and inventory pressure eases can filament yarn raise loads, revitalizing upstream destocking.
Midstream Calculus: Building a 'Profit Fortress' via Production Cuts
Filament yarn producers' logic is starkly different from past years. Previously, every time raw materials fell, they cut prices to promote sales, only to have processing margins squeezed to nothing, becoming mere "porters" for upstream. Now, they seem determined to protect the profit floor they have painstakingly built.
From an economic perspective, their decision is rational: previously, running at full capacity earned CNY 100 per ton; now, operating at 70% capacity earns CNY 500 per ton. Total profit is actually higher. If they cut prices now, it would not only trigger deeper downstream waiting ("If it can drop today, can it drop again tomorrow?") but also undo all previous production cut efforts. This tough stance has created the current standoff: filament yarn won't lower prices much, downstream won't buy, so sales volumes remain low; low sales volumes mean filament yarn inventory doesn't fall, making it impossible to raise loads; without higher filament yarn loads, upstream PTA can't sell.
For weaving enterprises in China's textile industrial clusters—especially in Shaoxing, Shengsze, and Nantong—this deadlock means taking orders equals losses. With high filament yarn prices and terminal orders unable to rise, buying and producing on the spot generally results in losses. Downstream is waiting for filament yarn prices to "catch down" to reasonable levels before restocking. Without reasonable raw material costs, taking terminal orders is just losing money for applause.
When Will the Deadlock Break?
Currently, no party is willing to make the first concession. Upstream PTA has already reduced supply through maintenance, but without filament yarn cooperation to raise loads, the effect is limited. Filament yarn protects profits through production cuts, but downstream waiting causes inventory accumulation, and production cuts themselves have limits. Downstream weavers hold the veto power of "not buying"—if prices don't drop enough, they would rather shut down than take loss-making orders.
The outcome of this three-way game usually depends on external shocks. For example, if terminal orders suddenly recover (e.g., the "golden September, silver October" peak season), downstream may be forced to accept current prices. If crude oil drops further, filament yarn's cost support weakens, increasing downward price pressure. Conversely, if US-Iran tensions escalate again, pushing up oil prices, the entire chain may reprice.
For buyers and foreign trade companies, the current strategy should focus on waiting, but be alert to sudden market reversals.