PX Operating Rate Drops Below 60%: The Game Between Upstream Supply Contraction and Downstream Off-Season in Polyester Chain

In early July 2026, China's PX operating rate is poised to drop below 60%, the lowest on record. Shenghong's 4 million tons/year PX unit is fully shut for 45 days, while Hainan Refinery's 660,000 tons/year line runs at reduced load for three months. These two major maintenance events have tightened the upstream raw material supply valve. Meanwhile, the PTA industry's massive maintenance wave since April continues, involving peak capacity of over 22 million tons—more than 20% of national capacity—pushing daily operating rates near 60%, the lowest since October 2021.

Upstream Supply Contraction: The Resonance Logic of PX and PTA

The supply contraction of PX and PTA is not isolated. PX is the direct feedstock for PTA, so PX maintenance reduces both its own supply and passes through to the PTA segment. Shenghong and Hainan Refinery's PX cuts mean PTA producers face higher raw material costs and lower supply. Industry estimates suggest early July PX operating rates will fall below 60%, a historic low, directly supporting PX prices. PTA followed with a 1.26% gain.

From an industrial cluster perspective, Shenghong's Lianyungang base and Hainan Refinery's Yangpu zone are key nodes in the polyester chain. Simultaneous maintenance at these two sites directly impacts raw material supply and pricing for nearby PTA plants. Traders raised spot quotes after the weekend, pushing spot and futures prices higher, reflecting strong market expectations of short-term supply tightness.

MEG's Divergent Pattern: Tight in July, Ample in August

MEG's supply-demand rhythm differs from PX and PTA. In July, domestic coal chemical and refining units enter concentrated maintenance, tightening local supply and supporting prices. But imports show a low-then-high trend: May imports were about 200,000 tons, June and July similar, while August port imports are expected to double to 400,000 tons. This means July's contraction is temporary; August's import surge will significantly ease domestic tightness, keeping MEG prices weak and volatile, awaiting downstream demand recovery.

For downstream polyester plants, the expectation of higher MEG imports in August dampens current purchasing enthusiasm. Without substantial end-user orders, plants prefer low inventory strategies, waiting for August cargoes. This wait-and-see attitude further caps MEG spot gains, making it the weakest among the three raw materials.

Off-Season Weakness: Weaving Operating Rates Down 8 Percentage Points YoY

Demand is the core weakness limiting the chain's upward momentum. July is the traditional off-season for polyester downstream, lacking explosive positive catalysts. In June, Jiangsu and Zhejiang weaving plants averaged 52.4% operating rate, up only 1 percentage point month-on-month but down 8 points year-on-year. While autumn/winter fleece fabrics saw slight order improvement, large-batch orders are missing, and plants are reluctant to raise operating rates or build inventory.

From industrial cluster reactions, operators in Shengze, Keqiao, and Nantong remain cautious. The significant year-on-year drop in operating rates means slow destocking at the end-user level, keeping pressure on polyester plants' sales. Ongoing PTA maintenance likely keeps polyester operating rates low, with market focus on upstream maintenance and restart dynamics.

Short-Term Strong, Medium-Term Depends on Orders: Outlook Under Supply-Demand Divergence

In summary, July's polyester chain upstream benefits from supply contraction logic due to concentrated maintenance, providing strong short-term price support. PX and PTA remain in a firm trend, but MEG gains are capped by expected import surges. The medium-term sustainability of any rally hinges on the pace of end-user weaving order recovery.

• If autumn/winter orders concentrate in August, polyester plant operating rates will rise, driving raw material demand. PX and PTA supply gaps could widen, pushing price centers higher.
• If end-user orders remain weak, upstream contraction is only a phase; as maintenance units restart, prices face downward pressure.

Crude oil macro volatility also matters. Iran's tightened key channel control has lifted international crude prices, raising commodity risk appetite. If crude continues to rise, it will further support polyester feedstock costs from the cost side.

Practical Recommendations

For Buyers - In July, PX and PTA supply is tight, prices high. Purchase on a need basis, avoid hoarding. Monitor restart progress of maintenance units; if smooth, prices may fall later. - MEG imports are expected to double in August, easing supply. Delay large orders until mid-August for better pricing. - Maintain communication with key suppliers like Shenghong and Hainan Refinery to track actual maintenance execution and avoid supply disruption.

For Foreign Trade Firms - When exporting polyester chips, POY, etc., negotiate price adjustment clauses with customers to include upstream raw material cost increases, protecting margins. - Monitor Middle East geopolitics affecting crude and PX imports; plan logistics and inventory in advance for potential supply delays. - Use futures instruments to hedge raw material price volatility, establishing appropriate positions in PX and PTA futures to lock in production costs.