July Polyester Feedstock Rally Faces Demand-Side Headwinds as Off-Season Arrives

In early July, upstream polyester feedstock prices—PX, PTA, and MEG—rose in tandem, with PTA gaining 1.26% and PX up 1.37%. This strength boosted sentiment across the chemical sector, but the rally was supply-driven rather than demand-led.

Supply Contraction Drives Feedstock Rally

PX led the charge. Multiple large-scale domestic PX units entered maintenance in late June. Shenghong’s 4-million-ton-per-year PX plant fully halted operations for about 45 days, while Hainan Refining & Chemical cut output on a 660,000-ton line for three months. Industry estimates suggest that domestic PX operating rates could fall below 60% in early July, a historic low, providing strong price support.

PTA has been under a massive maintenance cycle since April, with total capacity affected exceeding 22 million tons, or over 20% of national capacity. Daily operating rates bottomed near 60%, the lowest since October 2021. Maintenance plans remain dense through June and July, keeping capacity utilization low. A key variable to watch is whether rising processing margins reduce plant shutdown willingness.

MEG presents a mixed picture. Domestic coal-chemical and refinery units are in maintenance, tightening local supply and supporting prices. However, import pressure is building: May imports totaled around 200,000 tons, similar to June and July, but forecasts point to a doubling to 400,000 tons in August. This surge will ease domestic tightness and cap MEG price gains.

Demand-Side Weakness Caps Upside

The demand outlook is less rosy. July is a traditional off-season for downstream polyester consumption. Weaving data from Jiangsu and Zhejiang shows average operating rates of 52.4% in June, up just 1 percentage point month-on-month but down 8 percentage points year-on-year. While some autumn/winter fleece fabric orders have picked up, large-scale orders remain absent, keeping mills cautious about raising output and building inventories.

This means the feedstock rally is largely a supply-side push rather than a demand-driven recovery. The divergence between upstream and downstream fundamentals will continue to tug at polyester chain prices. In the near term, PX and PTA are likely to stay strong, but MEG gains will be limited by looming import volumes.

Practical Advice

For Buyers - Monitor PX and PTA maintenance schedules; early restarts due to rising margins could trigger price corrections. - With MEG imports expected to surge in August, consider delaying purchases to avoid peak pricing in July. - With no clear demand recovery signal, maintain just-in-time procurement rather than building large inventories.

For Exporters - While feedstock cost increases have not fully passed through to finished polyester products, consider modest upward adjustments in export quotes, but be prepared for customer pushback. - Keep an eye on crude oil and geopolitical risks, particularly Iran’s waterway controls, which could further impact feedstock costs. - The market’s next turning point hinges on the timing of weaving order releases; stay in close contact with downstream clients and adjust shipment schedules flexibly.