In early July, upstream polyester chain raw materials PX and PTA saw simultaneous price increases, with PTA rising 1.26% and PX up 1.37% in a single day. However, this rally has not effectively transmitted to downstream polyester products. Industry data shows PX operating rates are expected to fall below 60% in early July, a historic low, while PTA capacity utilization has remained low since April, bottoming near 60%. Meanwhile, downstream weaving shows clear weakness: Jiangsu and Zhejiang weaving mills averaged only 52.4% operating rates in June, up just 1% month-on-month but down 8% year-on-year. This divergence between upstream and downstream supply-demand dynamics is becoming the core battleground for the polyester chain in July.
Supply Side: Concentrated Maintenance Drives Raw Material Prices
PX leads the raw material rally, underpinned by an unexpected supply contraction. In late June, multiple major PX units entered maintenance cycles: Shenghong's 4 million-ton-per-year PX plant fully shut down for about 45 days, while Hainan Refining & Chemical reduced output on a 660,000-ton-per-year PX line for three months. Industry institutions predict domestic PX operating rates will fall below 60% in early July, the lowest ever. This sharp supply contraction directly supports PX prices and drives PTA prices higher.
For PTA, a large-scale maintenance cycle began in April, involving peak capacity of over 22 million tons, or over 20% of national capacity. Daily operating rates bottomed near 60%, the lowest since October 2021. Maintenance plans remain dense in June and July, with short-term capacity utilization unlikely to recover significantly. Notably, if processing fees continue to rise, some companies may reduce maintenance, affecting actual supply increments.
MEG's supply picture is more complex. In July, domestic coal chemical and refinery units undergo concentrated maintenance, reducing domestic output and providing some price support. However, imports show a low-then-high trend: May imports were 200,000 tons, with June and July similar, but institutions estimate August imports will double to 400,000 tons. This means August import arrivals will significantly ease domestic supply tightness, capping MEG price upside.
Demand Side: Off-Season Weighs on Upstream Momentum
In stark contrast to upstream supply contraction, downstream terminal demand is in a traditional off-season. July is the traditional off-season for polyester downstream, with no explosive positive catalysts. Weaving mills show weak willingness to raise operating rates or build inventories. The June operating rate of 52.4% in Jiangsu and Zhejiang, though slightly higher month-on-month, was 8% lower year-on-year, indicating terminal order recovery is far below expectations.
Currently, autumn/winter fleece fabrics see modest local order improvements, but the market lacks bulk order support, keeping mill sentiment cautious. Industry participants believe the second-half turning point must wait for a concentrated release of new orders. This demand weakness directly limits the transmission of upstream raw material price increases to polyester products, favoring upstream profit distribution.
Outlook: Key Variables in Supply-Demand Game
Overall, the upstream polyester chain in July relies on concentrated maintenance to form a supply contraction logic, providing strong short-term price support. PX and PTA will likely remain strong in the near term, but MEG is capped by future import increases. Medium to long term, sustained price rallies depend on terminal weaving order recovery.
- Crude oil macro volatility: Iran's tightened key waterway controls pushed international crude oil prices to rebound, lifting commodity risk appetite, but geopolitical uncertainty remains.
- Maintenance execution and restart progress: If PTA processing fees rise, companies may reduce maintenance, requiring tracking of restart schedules affecting short-term supply increments.
- Import impact: MEG imports are expected to double in August, easing domestic supply tightness but also capping price upside.
Industry participants should continuously track multi-dimensional supply-demand changes, focusing on autumn/winter order release timing and upstream unit dynamics to navigate the diverging chain.