As the first half of 2026 draws to a close, the polyester industry chain finds itself in an unusual state of rational deadlock. The 'golden March-April' season is long gone, and the 'golden September-October' remains distant. What truly unsettles the market is not a weakness in any single segment, but a simultaneous paralysis across the entire chain—upstream price cuts fail to stimulate demand, while downstream mills remain stubbornly cautious.
Cost Ceiling Shifts Downward
Two key variables supporting raw material costs are reversing. While the Middle East situation has not fully stabilized, the Strait of Hormuz blockade has been lifted, and stranded tankers in the Persian Gulf are gradually departing, easing the short-term energy supply crisis. International oil prices are unlikely to repeat the extreme 50% surge seen after the Lunar New Year. Morgan Stanley has once again lowered its oil price forecast within two weeks, shifting focus back to global oversupply, with Brent crude expected to average $75 per barrel in Q3 and Q4.
For the polyester chain, this means the cost ceiling is moving lower. Polyester filament yarn is unlikely to see the 'bull market' spikes of early March. While reduced cost pressure is welcome, the reality is more complex—benefits from lower costs cannot be transmitted downstream due to the collapse in demand.
Downstream 'Promotion Fatigue' and Inventory Glut
On June 29, polyester factories launched another round of major promotions, but the market response was tepid. Sales-to-output ratio hovered around 70% that day and quickly dropped to 30% the next. Compared to previous promotions—which, though short-lived, at least saw ratios easily exceed 100%—even this brief excitement has become a luxury.
This 'promotion fatigue' stems from extreme rational behavior by downstream weaving mills: no orders, no production. Profit margins have been squeezed over the past two years, leaving little room for operational flexibility. Fabric price elasticity is also poor, with inventories and breakeven points for new grey fabrics still under negotiation.
Meanwhile, polyester factory inventories continue to accumulate. Industry data shows POY, FDY, and DTY inventories at 30, 35.7, and 41.8 days, respectively. Factories lack incentive to cut prices further due to high raw material costs, but if downstream remains unresponsive, polyester filament may face sustained declines or a more aggressive clearance sale.
Low Inventories: The Wildcard for H2
A notable factor is that the entire textile industry has adopted a cautious restocking pace. Capacity utilization in H1 was limited, and finished goods inventories are relatively low compared to the past two years. This means that once demand recovers, a supply-demand mismatch could emerge in the short term, restoring fabric price flexibility.
Such flexibility was evident in last year's Lunar New Year 'neo-Chinese style' fabric boom. The most likely near-term catalyst is summer sun-protective clothing—but heavy rainfall this summer has delayed high temperatures, postponing demand. A major market rebound may have to wait until H2.
Risk Warning and Practical Advice
May and June have been tough for textile players. As market conditions worsen, risks increase, and payment security demands constant vigilance.