The sharp drop in international oil prices to pre-war levels following the US-Iran peace agreement and the gradual reopening of the Strait of Hormuz should have been good news for the polyester industry chain. However, the cost collapse has instead ignited a fierce tripartite game among upstream raw material suppliers, midstream filament producers, and downstream weaving mills. The conflicting demands over volume, price, and profit have led to a market stalemate, with filament production cuts emerging as the key variable to unlock the deadlock.
Divergent Interests Under Cost Collapse The upstream PX and PTA sectors face dual pressures: large-scale maintenance in July has reduced operating rates, tightening short-term supply, but the resumption of shipping through the Strait of Hormuz and the end of refinery maintenance from August onward will gradually ease feedstock shortages. The core anxiety for raw material suppliers is whether the polyester sector can ramp up production to match the return of future supply. Only if filament operating rates rise can PTA demand recover, accelerating destocking and balance sheet repair. Thus, upstream players urgently hope filament producers will boost output through promotions.
Downstream weaving mills, meanwhile, are trapped in a 'produce-now-lose-now' situation. Before the oil price crash, high filament prices squeezed their margins, and end-order prices could not rise. Now, despite lower costs, filament prices remain stubbornly high. Downstream mills view this as unreasonable and demand a 'catch-up drop' in filament prices before they restock. Without reasonable raw material costs, accepting orders means losses, so they wait for a price breakthrough.
Filament Production Cuts: A Profit Fortress Filament producers have fundamentally shifted their strategy. In the past, price cuts following raw material drops eroded processing fees, turning them into mere 'conveyors' for upstream. Now, by cutting operating rates to 70%, they have boosted per-ton profit from 100 yuan to 500 yuan. The logic is clear: lowering prices would trigger deeper downstream wait-and-see behavior and undo their output reduction efforts. This hardline stance has created a deadlock: filament mills refuse to cut prices, downstream mills refuse to buy, sales volumes stay low, inventory fails to clear, and operating rates cannot rise. Without higher filament output, PTA demand remains weak, frustrating upstream destocking goals.
This game is essentially a struggle over profit distribution across the chain. Both upstream and downstream interests come at the expense of the filament segment, and vice versa. But by wielding the 'knife' of production cuts, filament producers have seized control of the stalemate.
Market Outlook and Predictions Industry public data shows no party is willing to make concessions. Filament production cuts have protected profits in the short term but face a dilemma: maintaining cuts will reduce downstream orders due to high costs, potentially leading to passive inventory buildup; cutting prices will quickly erode margins and risk a price war.
For downstream mills, waiting for filament prices to fall is rational, but the window is limited. As raw material supply increases in August, PTA prices may drop further, testing filament price resilience. If filament producers opt for 'volume over price' through moderate promotions, the deadlock could break. The key is whether promotions can attract downstream buying without excessively squeezing margins.
For upstream, short-term maintenance supports PTA prices, but future supply pressure is building. If filament output recovery fails to materialize, PTA destocking will slow, and prices may come under pressure.