The game logic of the polyester chain is being rewritten as the second half of 2026 begins. Morgan Stanley's latest forecast predicts Brent crude will average $75 per barrel in Q3 and Q4, signaling the end of the cost-driven bull run that began early this year due to geopolitical tensions.
Weakened Cost Support, Failed Promotions
On June 29, polyester factories launched new promotions, but the market reacted coldly: the sales rate hovered around 70% that day, dropping to 30% the next. Unlike previous promotions that often pushed sales rates above 100%, the current round has fallen into 'fatigue'—price cuts fail to stimulate downstream buying, with weaving mills only making small replenishments at low prices.
The key variable is the shift in cost dynamics. The reopening of the Strait of Hormuz has allowed stranded tankers to depart, easing short-term energy fears. Crude oil is unlikely to surge 50% in days as it did after the Spring Festival. This removes the cost-pass-through mechanism that polyester factories once relied on to justify price hikes.
High Inventories, Stalemate Upstream and Downstream
On the demand side, the situation is dire. Downstream weaving mills have adopted extreme rationality: no orders, no production. Two years of squeezed profits have left them with minimal flexibility, and fabric price elasticity is low as the breakeven point between inventories and new greige goods remains contested.
Polyester factories face mounting inventory pressure. Industry data shows POY inventories at 30 days, FDY at 35.7 days, and DTY at 41.8 days, all still accumulating. Factories are reluctant to cut prices further due to high raw material costs, but the reality is clear: if downstream remains unresponsive, polyester filament will either slide gradually or see a sharp, concentrated sell-off.
Waiting for a Catalyst
The entire textile market is waiting for a trigger. History shows that a hit product can break the deadlock—the 'New Chinese Style' fabric trend after the 2023 Spring Festival is a prime example. In the near term, summer sun-protection clothing was the most likely catalyst, but persistent heavy rains across China have delayed high temperatures and suppressed demand.
A more positive factor lies in inventory structure. With both upstream and downstream players cautious, production capacity utilization has been limited in the first half, resulting in relatively low inventories across the chain. Once demand recovers, a short-term supply-demand mismatch could restore fabric price elasticity. Analysts expect a significant market move to occur in the second half.
Risks and Vigilance
May and June have been tough for textile players. The peak seasons of 'Golden March-April' are long gone, while 'Golden September-October' remains distant. The worse the market, the higher the risks. Some companies may resort to questionable practices, such as passing off inferior goods or defaulting on payments. Payment security remains the top concern.