Entering the second half of 2026, the reopening of the Strait of Hormuz has rapidly stripped away the geopolitical premium on crude oil, shifting the logic of the polyester chain from cost-driven to a real contest between inventory and demand.
Cost Side: Crude 'Ceiling' Lowers, Polyester Loses Bullish Momentum
While the Middle East situation remains unsettled, the unblocking of the Strait means stranded tankers are resuming passage, easing energy supply tensions in the short term. Oil prices are unlikely to repeat the 50% surge seen just after the Spring Festival. Morgan Stanley has again cut its oil price forecast within about two weeks, now expecting average Brent crude of $75 per barrel for both Q3 and Q4, as the market refocuses on global oversupply.
What does this mean for the polyester chain? The cost pressure on polyester filament yarn has eased significantly, removing the basis for the 'crazy bull' rallies seen in early March. Polyester mills, which previously relied on raw material price hikes to pass on inventory pressure, now face the stark reality of downstream purchasing appetite.
Demand Side: Promotion Fatigue, Weavers Enter Minimalist Mode
On June 29, polyester mills launched another large-scale promotion, but the market response was tepid: the sales-to-output ratio hovered around 70%, and by the next day it had slumped to around 30%. In contrast, previous promotions, though often 'one-day wonders,' at least easily exceeded 100%. Now even that brief spurt is gone, signaling clear 'promotion fatigue.'
Downstream weaving enterprises have fundamentally changed their behavior. With profit margins squeezed over the past two years, their financial flexibility is limited, and operating rates are extremely inelastic—no orders means no production. Fabric price elasticity is also suppressed, with the breakeven point between inventory grey fabric and new orders still in flux. Polyester mills are reluctant to cut prices due to high raw material inventory costs, but the data is grim: POY, FDY, and DTY inventories stand at 30, 35.7, and 41.8 days respectively, and are still accumulating. If downstream continues to hold back, polyester yarn may enter a gradual decline, or a deeper sell-off may be triggered.
Inventory Paradox: Low Stocks Could Be H2's Biggest Variable
Despite high polyester product inventories, the entire textile chain has adopted an extremely cautious stocking approach. Capacity utilization in H1 was limited, and both upstream and downstream raw material and finished goods inventories are generally lower than the same period in the past two years. This 'low inventory' pattern is the key variable for H2.
Should demand materially recover—sparked by a hit product like last Spring Festival's 'New Chinese Style' fabric—a short-term supply-demand mismatch could quickly amplify, restoring price flexibility from its current low-elasticity state. Summer sun-protection clothing is a potential category, but persistent heavy rainfall and delayed high temperatures in China have postponed related demand.
Risks and Opportunities: Payment Security is the Red Line
May and June were tough for textile players. With the peak seasons far behind and the 'Golden September and Silver October' still distant, a cold market breeds risk. Some firms may resort to unusual measures due to cash pressure, making payment security the top priority.
In summary, the core contradiction for the polyester chain in H2 is the tug-of-war between fading cost support and low-inventory elasticity. For buyers, this is a window for watchful waiting and opportunistic replenishment. For exporters, focus on FX fluctuations and overseas order rhythms. A market rally may need just one hit product, but until then, preserving cash flow is paramount.