The polyester chain in early July shows a clear upstream-downstream divergence: upstream PX and PTA prices are supported by supply contraction from concentrated plant maintenance, while downstream weaving is in a traditional off-season with weak terminal demand, limiting upward price momentum. This supply-demand divergence suggests limited price upside and potential mid-term volatility.
Supply Side: Maintenance Wave Drives Upstream Strength
PX leads the rally. Industry data shows that in late June, Shenghong shut down its 4 million tons/year PX plant for about 45 days, while Hainan Refining reduced operations on a 660,000 tons/year line for three months. Multiple major unit overhauls are expected to push domestic PX operating rates below 60% in early July, a historic low. This supply contraction directly supports PX prices, with July 7 closing up 1.37%.
PTA is also in a heavy maintenance period. Since April, large-scale overhauls have involved peak total capacity exceeding 22 million tons, over 20% of national capacity. Daily operating rates bottomed around 60%, the lowest since October 2021. Dense maintenance plans in June and July mean capacity utilization will not recover soon, keeping PTA supply tight. However, rising processing fees may reduce plant maintenance willingness.
MEG supply shows phased divergence. In July, domestic coal chemical and refining units undergo concentrated maintenance, tightening local supply and supporting prices. But imports show a front-low-back-high trend: May imports were 200,000 tons, stable in June and July, but estimated to double to 400,000 tons in August. This will ease domestic supply tightness and cap MEG gains.
Demand Side: Off-Season Weakening Weaving Recovery
In contrast to upstream supply contraction, downstream demand is weak. July is a traditional off-season for polyester downstream, lacking explosive positive catalysts. Weaving data confirms this: June Jiangsu-Zhejiang weaving enterprises' average operating load was 52.4%, up only 1 percentage point month-on-month but down 8 percentage points year-on-year. Autumn-winter fleece fabrics saw partial order recovery, but lack of bulk orders means weaving enterprises have low willingness to increase operating rates or build inventory.
Weak demand means upstream raw material price increases are hard to pass downstream. Polyester finished product companies face dual pressure from rising costs and insufficient orders, likely keeping overall industry operating rates low.
Outlook: Short-Term Support vs. Mid-Term Pressure
Overall, the July polyester chain shows 'strong upstream, weak downstream.' Short-term PX and PTA have strong support from supply contraction, while MEG gains are limited by future import increases. The mid- to long-term sustainable rally depends on terminal weaving order recovery. Additionally, crude oil macro volatility, plant maintenance execution, and restart progress are key variables. Iran's tightened key waterway control pushed international crude oil to rebound, boosting commodity risk appetite and providing extra support for raw materials. But if downstream demand remains sluggish, price upside will be compressed.