Promotions are losing their magic. The game between polyester plants and downstream weaving mills has shifted from price wars to a battle of patience. On June 29, polyester factories launched a new round of major discounts, but same-day sales hit only around 70%, dropping sharply to 30% the next day. Compared with past promotions that easily exceeded 100% sales rates, the market is clearly suffering from 'promotion fatigue.' Downstream purchasing willingness has hit rock bottom, with only small, opportunistic replenishment and no appetite for large-scale stockpiling.
Cost Side: Lower Oil Ceiling Eases Polyester Cost Pressure
Although the Middle East situation is not fully resolved, the reopening of the Strait of Hormuz has allowed stranded tankers in the Persian Gulf to depart, providing short-term relief from the energy crisis. Morgan Stanley has once again lowered its oil price forecast within two weeks, stating that market attention has returned to global oversupply. The bank expects spot Brent crude to average $75 per barrel in both Q3 and Q4. This means the biggest variable for polyester raw material costs—oil—has seen its ceiling significantly lowered. Polyester filament yarn is unlikely to repeat the 'crazy bull' rally seen in early March, when prices surged by thousands of yuan. With weaker cost support, polyester plants have less room to hold prices firm.
Demand Side: Weaving Mills Turn Extremely Rational, Low Operating Rates Become the Norm
The behavior of downstream weaving mills has fundamentally changed: they refuse to run machines without confirmed orders. Profits have been squeezed over the past two years, severely limiting companies' cash flow and maneuvering room, resulting in very low operating rate flexibility. Fabric price elasticity is also weak, with breakeven points between inventory and fresh grey fabrics still under negotiation. This extreme rationality means that polyester plants' price concessions fail to translate into effective transactions. Even with promotions, weaving mills 'won't even bother to look.'
High Inventories: Polyester Plants Caught Between Cutting Prices and Holding Firm
Polyester plants are reluctant to cut prices further due to their own high raw material costs. But the data tells a stark story: inventories of POY, FDY, and DTY stand at 30 days, 35.7 days, and 41.8 days, respectively, and are still accumulating. If downstream demand continues to stay away, polyester filament may either continue to drift lower or see a more aggressive clearance sale. Polyester plants are trapped in a dilemma: cutting prices doesn't move goods, while holding prices risks suffocating under inventory.
Second-Half Outlook: Can Low Inventories Spark Price Elasticity?
Despite the current market weakness, a key variable is brewing. Because both upstream and downstream players have been cautious in stocking up, and capacity utilization in the first half was limited, overall market inventories are relatively low compared with the past two years. This means that once demand recovers—triggered by a breakout product (like last year's 'New Chinese-style' fabrics during Spring Festival)—a short-term supply-demand mismatch could emerge, restoring fabric price elasticity. In the near term, summer sun-protection clothing was seen as a potential catalyst, but frequent heavy rainfall and delayed high temperatures in China have pushed back that demand.