International crude oil prices fell below $70 per barrel on June 24, with WTI hitting an intraday low near $69, returning to levels seen before the escalation of the Middle East crisis. Despite a slight rebound on June 25 due to geopolitical news, prices hovered around the $70 mark again on June 26. Yet polyester filament yarn prices remain nearly 1,000 yuan per ton higher than pre-crisis levels. This price gap is tearing apart expectations across the supply chain.
Crude vs. Polyester: The Logic Behind the Divergence
From a cost-pass-through perspective, PTA and MEG futures have essentially retraced to their starting points, meaning the theoretical raw material cost for polyester filament has fallen significantly. However, polyester mills have not adjusted their offers accordingly—on June 24, some mills only cut prices by 50-150 yuan per ton, far less than the market expected.
The key lies in inventory costs. Industry data shows POY mill inventories at about 30 days, FDY at 35.7 days, and DTY as high as 41.8 days. Most of this inventory was produced during the high-oil-price, high-raw-material-cost period. If mills now cut prices aggressively, they would convert unrealized losses into actual losses. With capacity utilization at only 73.81% (data from Longzhong), mills have no urgency to destock massively, preferring a 'slow drop, slow sell' strategy.
Weavers: The Temptation of Cash Flow and the Cost of Waiting
For weaving mills, the high cash margin on polyester filament suggests significant room for further price declines. If they buy just for inventory, a one-month timing difference could mean hundreds or even thousands of yuan per ton in raw material cost variance, yet the final product sells at the same price. Therefore, unless they have confirmed orders to fill, most weavers have adopted a 'buy only if necessary' stance.
This wait-and-see attitude directly suppresses transaction volumes, further pressuring polyester mill inventories. The upstream-downstream standoff thus becomes entrenched: upstream refuses to sell at a loss, and downstream refuses to buy at high prices.
Weak Domestic Demand and the Export Window
The fundamental cause of the current supply chain divergence is weak demand relative to supply. This year's unusually cool summer has delayed seasonal demand for sun-protective clothing, leaving domestic demand unsupportive. However, the market is not without bright spots. With the full reopening of the Strait of Hormuz shipping channel, global crude and commodity trade is gradually normalizing, and several overseas economies are accelerating recovery, which should boost international textile consumption.
Export order growth will be a key variable to offset domestic weakness. If external demand can absorb some of the excess polyester filament capacity, mill inventory pressure could ease, and the intensity of price negotiations may moderate.
Near-Term Outlook: The Path to Price Gap Repair Is Unclear
In the short term, the 'weak supply-demand, high price gap' pattern in the polyester chain is unlikely to break. If crude stays around $70, polyester filament prices still have downside room, but mill inventory cost floors will provide periodic support. Weaving mills' procurement strategies will depend on order visibility rather than raw material prices alone.