In late June 2026, polyester plants' sales promotions hit a new low in efficiency. On June 29, sales reached only 70% of target, dropping to 30% the next day. The market's 'immunity' to promotions is growing, with downstream buyers showing minimal willingness to stock up, only making small purchases at low prices.
The Double Squeeze of Costs and Demand
The cost side of the polyester chain is undergoing significant changes. With the reopening of the Strait of Hormuz, stranded oil tankers are resuming transit, easing short-term energy supply fears. Morgan Stanley has again lowered its oil price forecast, now expecting Brent crude to average $75 per barrel in Q3 and Q4, as the market refocuses on global oversupply. This means the cost pressure on polyester filament has eased sharply, making a repeat of the March 2026 price surge unlikely.
Demand is even more concerning. Downstream weaving mills have become extremely rational—they refuse to run machines without confirmed orders. Profit margins have been squeezed over the past two years, leaving companies with little room to maneuver and very low operating flexibility. Fabric price elasticity is also weak, with breakeven points for inventory and fresh greige goods still being contested. Polyester plants are reluctant to cut prices further due to their high raw material costs, but inventory data is stark: POY, FDY, and DTY stocks stand at 30, 35.7, and 41.8 days respectively, and are still accumulating. If downstream demand remains weak, polyester yarn prices may continue to fall or see a more aggressive clearance sale.
Low Inventories: A Potential Trigger for H2
Despite the current gloom, a key variable is brewing—low inventories. In H1 2026, due to cautious stocking across the textile chain and limited capacity utilization, finished goods inventories are at relatively low levels compared to the past two years. This means that if demand picks up in H2, a supply-demand mismatch could occur in a short period, restoring price elasticity for fabrics.
Looking back at the explosive 'New Chinese Style' fabric market after the 2025 Spring Festival, the logic was a sudden demand surge combined with low inventories driving price spikes. The market is still waiting for a similar trigger. In the short term, the most likely candidate is summer sun-protective clothing, but heavy rainfall this year has delayed hot weather and the associated demand. However, as temperatures rise, this category could still act as a short-term catalyst.
Risks and Practical Advice
May and June were tough for textile players. The 'Golden March-April' season is long gone, and the 'Golden September-October' is still far away. The worse the market, the higher the risks, especially regarding payment security.