Crude oil prices have fallen back to pre-Middle East tensions levels, yet polyester filament yarn prices remain nearly 1,000 yuan per ton higher. This price gap reflects a deep tug-of-war along the polyester supply chain amid supply-demand imbalances.
Crude Returns to Origin, Polyester Prices Stay Stubborn
On June 24, U.S. WTI crude oil futures briefly fell below $70 per barrel, returning to levels seen before the latest Middle East escalation. Although prices rebounded on June 25 due to geopolitical news, they slipped back to around $70 on June 26. Meanwhile, PTA and ethylene glycol futures have also largely returned to pre-rally levels.
However, polyester filament yarn prices have not followed suit. Industry data shows current polyester prices remain about 1,000 yuan per ton above pre-surge levels. This means polyester plants are enjoying significant theoretical cash margins based on current raw material costs.
But high cash flow does not mean realized profits. Current inventory levels stand at 30 days for POY, 35.7 days for FDY, and 41.8 days for DTY. These stocks were produced when raw material costs were high. Selling at prices based on current low-cost inputs would turn paper profits into real losses.
Upstream-Downstream Standoff: The 'Buy on Rumor, Sell on Fact' Paradox
For weavers, high polyester cash margins signal further price downside. Unless they have firm orders to fulfill, purchasing appetite is minimal—a month's delay in buying could mean hundreds or even thousands of yuan in cost savings per ton, with no difference in final product value. The market has entered a 'buy only when necessary' mode.
Polyester plants are playing for time. With capacity utilization at just 73.81% for direct-spun polyester filament—a three-year low—plants face limited pressure to sell quickly. They prefer gradual price cuts to digest high-cost inventory rather than aggressive markdowns.
This stalemate stems from weak end-demand. An unusually cool summer has delayed seasonal orders for sun-protective apparel, slowing fabric procurement. Domestic demand weakness remains the core bottleneck in the supply chain.
Can Exports Break the Deadlock?
Not all is bleak. With the Strait of Hormuz shipping channel fully reopened, global crude and commodity trade is normalizing. Multiple overseas economies are accelerating recovery, potentially boosting international textile demand.
For Chinese textile exporters, rising export orders could partially offset domestic headwinds and provide support for polyester filament prices. However, in the near term, the weak-demand, high-margin gap is likely to persist, keeping the upstream-downstream tug-of-war intact.