In early July, the upstream polyester chain saw a strong rally, with PX, PTA, and ethylene glycol significantly outperforming downstream polyester products. This rally is not demand-driven but stems from supply contraction expectations due to concentrated plant maintenance.
Supply Contraction as Core Driver
PX leads the rally. Public industry data shows that multiple large-scale PX plants entered maintenance or reduced load at the end of June. Shenghong's 4 million ton/year PX plant is fully shut down for about 45 days, while Hainan Refining & Chemical's 660,000 ton/year line runs at low load for up to three months. As a result, industry institutions estimate that domestic PX operating rates will fall below 60% in early July, hitting an all-time low.
PTA faces a similar situation of low capacity utilization. Since April, the domestic PTA industry has launched large-scale concentrated maintenance, involving peak capacity of over 22 million tons, accounting for more than 20% of national capacity. Daily operating rates bottomed out near 60%, the lowest since October 2021. Current maintenance plans for June and July remain dense, with limited near-term recovery.
Ethylene glycol shows a phased supply divergence. In July, domestic coal chemical and refinery units undergo concentrated maintenance, with local output expected to decline significantly. However, imports are recovering: May imports totaled about 200,000 tons, with June and July maintaining similar levels. Institutions predict August port imports will double to 400,000 tons, capping ethylene glycol price gains.
International Crude and Macro Sentiment Resonance
The upstream rally is not only supported by domestic maintenance but also by external factors. Internationally, Iran's strengthening of key waterway controls pushed international crude oil prices to rebound, lifting overall commodity risk appetite. Domestically, after a weekend break, traders collectively raised spot quotations, boosting spot and futures prices. This internal-external linkage makes the upstream rally more solid.
Weak Downstream Demand as Clear Drag
Despite strong upstream raw materials, the chain's sustainability hinges on demand. July is the traditional off-season for downstream polyester, lacking explosive positives. Weaving data is weak: in June, Jiangsu and Zhejiang weaving enterprises' average operating load was only 52.4%, up 1 percentage point month-on-month but down 8 percentage points year-on-year.
While autumn/winter fleece fabrics see slight order recovery, the market lacks bulk orders, and weaving enterprises are reluctant to actively increase operations or stock up. Overall sentiment is cautious, meaning for buyers, current raw material price increases are more cost pressure than demand-driven benign transmission.
Outlook Under Supply-Demand Divergence
In summary, July's polyester chain shows clear supply-demand divergence: upstream relies on maintenance-driven supply contraction logic for short-term support; downstream is in traditional off-season with limited demand improvement. This tug-of-war will dominate short-term trends.
Short-term PX and PTA remain strong, while ethylene glycol is capped by future import increases. Medium-term sustained uptrend depends on end-user weaving order recovery. Meanwhile, crude oil macro volatility, maintenance execution, and restart progress are key variables, requiring continuous multi-dimensional tracking.