Crude oil futures have fallen back to pre-Middle East crisis levels, yet polyester filament yarn (POY/FDY/DTY) still carries a premium of nearly 1,000 yuan per ton above pre-conflict prices. This gap reflects not market dysfunction but a calculated standoff between upstream and downstream players.
Root of the Price Divergence
On June 24, WTI crude briefly dipped below $70/barrel, erasing most of the geopolitical gains accumulated this year. Despite a technical rebound on June 25, prices hovered near $70 again on June 26. Meanwhile, polyester filament yarn prices remain about 1,000 yuan/ton higher than before the surge. PTA and ethylene glycol futures have already returned to pre-crisis levels, implying that cost support for polyester yarn has largely evaporated.
However, the polyester plants' apparent high cash margins are deceptive. Industry data show POY inventory at 30 days, FDY at 35.7 days, and DTY at 41.8 days. Most of these stocks were produced when raw material costs were high. A sharp price cut would turn paper losses into real ones. Therefore, mills prefer to keep operating rates low—current capacity utilization for direct-spun polyester filament is only 73.81%, near a three-year low—rather than actively destocking.
Weavers Adopt 'Buy-Only-If-Necessary' Stance
For weaving mills, the high cash margin on polyester yarn signals room for further price declines. Unless they have orders to fulfill, buying for inventory could mean a cost difference of hundreds of yuan per ton within a month, while the final product remains the same. This risk has pushed many weavers into a 'buy only when necessary' mode.
Rumors of deeper production cuts by major polyester groups circulate frequently but lack credibility. Actual capacity utilization data shows a slight 0.29% week-on-week increase, suggesting that output restraint is more verbal guidance than real action.
Core Contradiction: Supply-Demand Mismatch
The fundamental driver of the current divergence is weak domestic demand relative to supply. Summer sun-protection apparel sales, normally booming by now, have been delayed by unusually cool weather, keeping end-user demand sluggish.
On the export side, however, positive signals are emerging. The full reopening of the Strait of Hormuz shipping lanes is restoring global crude and commodity trade flows, while economic recovery in several overseas economies is accelerating. This could boost international textile consumption, partially offsetting domestic weakness and providing a floor for polyester yarn prices.
In the near term, the 'weak demand, wide price gap' pattern is likely to persist. The tug-of-war between polyester plants and weavers will continue to dominate price dynamics, and any shift in inventory pressure or demand could trigger the next adjustment.