July's polyester chain market shows a stark contrast: upstream PX and PTA continue to climb on supply contraction, while downstream weaving remains mired in the off-season with operating rates declining year-on-year. The tension between strong raw materials and weak terminal demand is deepening the divergence within the chain.
Supply Side Firmness: The Maintenance Logic of PX and PTA
PX is the frontrunner in this price rally. By end-June, a 4 million-ton/year unit at Shenghong was fully shut for 45 days, while a 660,000-ton/year line at Hainan Refining & Chemical entered three months of reduced operation. Concentrated maintenance at major units has led industry agencies to forecast that domestic PX operating rates will fall below 60% in early July, a historic low. The sharp supply contraction directly pushed PX prices up 1.37%, leading the entire chain.
For PTA, a large-scale maintenance cycle began in April, involving total capacity exceeding 22 million tons, or over 20% of national capacity. Daily operating rates once dipped to around 60%, the lowest since October 2021. Maintenance plans remain dense through June and July, with capacity utilization unlikely to recover significantly in the short term. This means PTA's supply-tightening pattern will persist, providing strong price support.
Weak Demand: Off-Season and Weaving Struggles
In stark contrast to upstream activity, downstream demand feels chilly. July is a traditional off-season for polyester downstream, lacking explosive positive catalysts. Weaving data is telling: in June, average operating loads at Jiangsu-Zhejiang weaving mills were only 52.4%, up 1 percentage point month-on-month but down 8 percentage points year-on-year.
While autumn/winter fleece fabrics saw a slight pickup in niche orders, the market generally lacks large-batch orders. Weaving mills show weak willingness to raise operating rates or build inventories, with cautious sentiment prevailing. This means upstream price increases lack actual end-demand absorption, and cost transmission faces resistance. The divergence between upstream and downstream supply-demand dynamics is the core contradiction.
Ethylene Glycol's 'Different' Divergence: Domestic Tightening vs. Import Surge
Ethylene glycol's supply-demand landscape is more complex. In July, domestic coal-chemical and refining units entered concentrated maintenance and load-reduction cycles, with monthly output expected to decline significantly, providing some support to prices. However, imports show a pattern of low early and high later. Data shows May imports at 200,000 tons, with June and July roughly flat, but agencies estimate August port imports will double to 400,000 tons.
The surge in H2 import volumes will effectively ease domestic supply tightness, capping ethylene glycol price gains. The overall weak macroeconomic oscillation pattern persists, and a market reversal awaits downstream demand recovery.