Promotions that once lasted a day now barely last half a day. On June 29, polyester mills offered discounts but only achieved 70% of normal sales; the next day, that figure collapsed to 30%. Downstream fabric mills are too cautious to even chase low prices. The market is experiencing textbook 'promotion fatigue'.
Cost Ceiling Drops
The key variable propping up polyester prices—crude oil—is losing steam. With the Strait of Hormuz reopened, stranded tankers are departing, easing the energy crisis. Morgan Stanley has again lowered its forecast within two weeks, now expecting Brent crude to average $75 per barrel in Q3 and Q4. This means polyester filament yarn costs are unlikely to repeat the sharp surges seen in early March.
For polyester mills, high-cost raw material inventory is the main reason they are reluctant to offer deeper discounts. But the reality is stark: industry data shows POY, FDY, and DTY inventories stand at 30, 35.7, and 41.8 days respectively, and are still accumulating. If downstream buying remains weak, a sustained price decline or a more aggressive sales push is inevitable.
Rationality as Vulnerability
Downstream weaving mills have become hyper-rational: they refuse to run machines without confirmed orders. With margins squeezed over the past two years, companies have little room to maneuver, and capacity utilization is highly inelastic. Fabric prices are similarly sluggish, as the breakeven point between inventory and new orders remains contested.
This 'rationality' is essentially a defensive posture. Low inventory should normally underpin price elasticity, but in the face of collapsed demand, it has instead become a buyer's market advantage. Should a hit product emerge—like last Chinese New Year's 'New Chinese Style' fabric—low stocks could quickly trigger a supply-demand mismatch, restoring fabric price elasticity.
Waiting for a Catalyst: Sun-Protection Wear and H2
The most likely near-term catalyst is summer sun-protection apparel. But persistent heavy rainfall this year has delayed high temperatures, pushing back demand. May and June were tough for textile players: the 'golden March-April' season is long gone, and 'golden September-October' is still far off. The weaker the market, the higher the risk.