Crude oil prices have fallen back to pre-crisis levels, yet polyester filament yarn (PFY) remains nearly RMB 1,000/ton above those levels. On June 24, WTI crude briefly broke $70/bbl, and despite a minor rebound on June 25 due to geopolitical volatility, it hovered near $70 again on June 26. Meanwhile, PFY prices—POY, FDY, DTY—stayed elevated, creating a significant price gap that underscores deep supply-demand imbalances across the polyester chain.
The Cash Flow Paradox
From the feedstock side, PTA and MEG futures have essentially returned to their pre-crisis lows, giving PFY producers exceptionally high theoretical cash margins. Industry data shows POY, FDY, and DTY cash flows are at multi-year highs. However, this paper profitability has not translated into aggressive price cuts. Polyester plants are sitting on high-cost inventories—POY stocks at 30 days, FDY at 35.7 days, DTY at 41.8 days. Selling at current low prices would turn unrealized losses into realized ones. With capacity utilization at a three-year low of 73.81%, mills are under no pressure to liquidate quickly; they prefer gradual price declines to absorb inventory.
Weavers Adopt 'Buy Only for Orders' Stance
For downstream weavers, the high cash margin signals further price downside. Unless they have confirmed orders to fulfill, delaying purchases by a month could save hundreds of yuan per ton on identical fabrics. As a result, the market has entered a 'non-essential, no-buy' mode, further suppressing actual demand and deepening the stalemate.
Core Issue: Weak Demand Overshadows Supply
The fundamental driver of this divergence is weak domestic demand and oversupply. Summer is typically peak season for sun-protection fabrics, but unseasonably cool weather has delayed order placement. Domestic demand weakness, coupled with weavers' wait-and-see attitude, leaves PFY without upward momentum. On the brighter side, the full reopening of the Strait of Hormuz shipping channel is restoring global crude and commodity trade flows, and several overseas economies are accelerating recovery, which could boost textile export demand. Increased export orders may partially offset domestic weakness and ease downward pressure on PFY.
Near-Term Outlook: Gridlock Persists
In the near term, the 'weak supply-demand, high price gap' pattern is likely to continue. Polyester mills will resist aggressive price cuts due to high-cost inventories, while weavers delay purchases expecting further declines. The tug-of-war between upstream and downstream will dominate market direction. Buyers should monitor crude oil volatility, polyester plant production cuts, and export order signals to time their procurement.