In July, the polyester chain exhibits a classic divergence between strong upstream and weak downstream. Feedstock prices for PX, PTA, and MEG rose concurrently, with PX up 1.37% and PTA up 1.26%. However, downstream weaving operating rates dropped 8 percentage points year-on-year, indicating lackluster end-user demand. This structural imbalance means the upstream strength is supply-driven rather than demand-led, concentrating profits upstream while midstream and downstream players face cost pressure and insufficient orders.
Supply Side: Plant Maintenance Reshapes Upstream Pricing
PX is the core driver of this price rally. At end-June, Shenghong's 4-million-ton/year PX plant fully shut down for about 45 days, and Hainan Refining & Chemical reduced output on a 660,000-ton/year line, with low loads lasting three months. Industry estimates put domestic PX operating rates below 60% in early July, a historic low. This supply contraction directly supports PX prices and transmits upward to crude oil—Iran's tightened strait controls boosted international crude, lifting chemical sector risk appetite.
PTA maintenance has persisted since April, involving peak capacity of over 22 million tons, exceeding 20% of national capacity. Daily operating rates bottomed near 60%, the lowest since October 2021. Maintenance plans remain dense in June-July, with capacity utilization unlikely to rebound soon. Buyers should watch two key variables: whether higher processing margins prompt early restarts, and actual restart progress of idled units, which will determine short-term supply increments.
MEG shows phased supply-demand divergence in July. Domestic coal-chemical and refinery units are concentrated in maintenance, with clear monthly output decline expectations, supporting prices. But imports show a front-low-back-high trend: May imports were 200,000 tons, June-July similar, with institutions forecasting a doubling to 400,000 tons in August. H2 import surges will ease domestic tightness, capping MEG upside, keeping prices in weak oscillation.
Demand Side: Weaving Off-Season Hinders Chain Transmission
July is a traditional consumption off-season for polyester downstream, with no explosive demand drivers. June saw Jiangsu-Zhejiang weaving mills average 52.4% operating rates, up only 1 percentage point month-on-month but down 8 points year-on-year. While autumn/winter fleece fabrics saw slight order improvements, large batch orders are lacking, curbing mills' willingness to raise utilization or build inventories.
This weak demand directly suppresses price transmission for polyester finished goods. Upstream price hikes struggle to pass downstream, squeezing polyester producers' margins. Industry participants remain cautious, awaiting signals of concentrated new order releases. The industrial logic suggests that only when end-user orders recover and weaving rates rise can a true positive feedback chain form—otherwise, upstream supply contraction only generates short-term pulse rallies, not sustainability.
Outlook and Key Variables
Short-term, PX and PTA maintain a strong bias, supported by solid maintenance supply. MEG faces upside constraints from future import surges, moving independently. Medium-term sustainability hinges on terminal weaving order recovery. Additionally, crude oil macro volatility, maintenance execution, and restart progress are key price variables.