International crude oil has fallen back to pre-Middle East crisis levels, but polyester filament yarn prices remain nearly 1,000 yuan per ton higher. On June 24, WTI crude briefly dipped below $70, though it later rebounded to around $70. Polyester yarn, however, has not followed suit; PTA and ethylene glycol futures have essentially returned to their starting points. This price divergence signals not a simple 'catch-up decline' but a deep-seated tug-of-war between upstream and downstream players over inventory costs, operating rates, and demand expectations. Polyester plants enjoy healthy cash flows on paper, but their existing inventory was produced at high costs—POY stocks stand at 30 days, FDY at 35.7 days, and DTY at 41.8 days. Cutting prices would turn paper profits into real losses.
Behind the Price Gap: Inventory Costs and Capacity Constraints
Polyester plants are not unwilling to cut prices, but they cannot afford to do so quickly. Current capacity utilization for direct-spun polyester filament yarn stands at 73.81%, only marginally up by 0.29% from the previous week, yet still near a three-year low. Low operating rates should ease inventory pressure, but high-cost inventory creates a dilemma: cutting prices hurts now, while holding prices risks future losses. On June 24, some plants reduced prices by 50-150 yuan per ton, far below weavers' expectations.
Weavers have responded with a 'buy-only-when-necessary' approach. For stock production, a one-month delay in raw material purchasing could save hundreds or even thousands of yuan per ton, while the final product sells at the same price. This divergence in mindsets has led to thin trading and mounting downward price pressure.
Weak Demand: Domestic Sluggishness and Abnormal Weather
The root cause of the price gap is supply-demand imbalance. Domestic consumer demand is weak—the peak season for summer UV-protective fabrics has yet to arrive due to unseasonably cool weather near July. This lack of domestic demand discourages weavers from stockpiling.
Meanwhile, overseas markets show positive signs. With the Strait of Hormuz shipping channel fully reopened, global crude and commodity trade is stabilizing, and multiple economies are accelerating recovery. This could boost international textile demand, providing a floor for the polyester market.
Outlook: Stalemate Likely to Persist
In the near term, the weak supply-demand, high-price-gap pattern is unlikely to change. Polyester plants will likely maintain low operating rates and slowly destock high-cost inventory; weavers will stay on the sidelines until prices fall to reasonable levels or firm orders emerge.
The key variable is the pace of export recovery. If overseas orders concentrate in Q3, it could ease the domestic supply-demand imbalance and accelerate the convergence of polyester yarn prices with crude oil costs. Otherwise, a sharper correction may be in store.