In the first week of July 2026, spot prices for polyester POY (150D/48F semi-dull) narrowed to a range of 8,050-8,200 CNY/ton. Two key signals warrant attention: first, Rongsheng Petrochemical quoted 8,200 CNY/ton while Zhejiang Juxing Chemical quoted 8,050 CNY/ton, a spread of 150 CNY/ton that is unusual for the same specification; second, both quotes fall below the full production cost for most SMEs, indicating the industry has entered a cash-loss zone.
Collapse of upstream cost support
PTA and MEG are the direct raw materials for polyester POY. Since late June, the PTA futures contract has fallen over 4%, with MEG declining even more sharply. The rapid drop in costs has removed the last price support for POY. Critically, the spread between POY and its raw materials—the processing margin—has compressed to below 500 CNY/ton, far below the industry's breakeven range of 800-1,000 CNY/ton. This means even if raw material prices fall further, POY producers cannot cut prices to stimulate demand, as each additional ton sold deepens losses.
Regional industrial belt divergence
Zhejiang is the main production area for polyester POY. Rongsheng is based in Xiaoshan, Hangzhou, while Juxing is in Keqiao, Shaoxing. Though geographically adjacent, the downstream ecosystems differ markedly. Xiaoshan's polyester plants are more integrated with refining and petrochemical complexes, offering stronger resilience. Keqiao hosts numerous small and medium-sized weaving mills that are highly sensitive to raw material price fluctuations. Juxing's lower quote reflects its customer base—SME weavers whose purchasing willingness has hit rock bottom, with orders typically covering less than two weeks.
Downstream, weaving mill operating rates in Jiangsu and Zhejiang have slipped from 75% in May to around 68%, with inventory days rising above 25. Mills have shifted fully to a "buy-as-needed" strategy, demanding payment terms or acceptance bills from suppliers. Some cash-strapped traders are even offloading earlier inventories at 50-100 CNY/ton below factory prices, further suppressing spot liquidity.
Transmission to exports and end consumption
Lower POY prices theoretically benefit downstream textile and apparel exporters' cost control. However, overseas brand customers are simultaneously cutting their purchase prices. In H1 2026, China's textile and apparel exports fell about 2.5% year-on-year, with no significant recovery in restocking demand from Europe and the US. Weak end consumption has distorted profit distribution across the chain—upstream raw material prices fall, downstream buyers squeeze, and intermediate weaving and dyeing mills get squeezed from both sides.