The polyester chain is experiencing a significant structural divergence: upstream raw materials are seeing strong price gains due to concentrated plant maintenance, while downstream end-users are mired in a traditional off-season with sluggish orders. This mismatch in supply-demand dynamics is testing market tolerance.
Upstream Supply Tightens: Maintenance Wave Boosts Prices
On the supply side, the core driver of upstream raw material strength is the concentrated implementation of plant maintenance. In the PX sector, Shenghong's 4 million-ton-per-year plant has fully shut down for about 45 days, while Hainan Refining & Chemical has reduced output on a 660,000-ton line for up to three months. Industry institutions predict that domestic PX operating rates will fall below 60% in early July, hitting a historic low. This sharp supply contraction directly supports the PX market, with closing data showing a 1.37% gain.
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 fell to around 60%, the lowest since October 2021. Dense maintenance schedules in June and July mean short-term capacity utilization is unlikely to recover significantly. PTA rose 1.26%, with the strong raw material end boosting sentiment across the chemical sector.
MEG shows a phased divergence. Domestic coal-chemical and refinery units are concentrated in maintenance, reducing monthly output and providing some price support. However, imports are low now but will rise later as shipping channel conditions improve. Data shows May MEG imports at 200,000 tons, with June and July similar; institutions estimate August port imports will double to 400,000 tons, capping future gains.
Downstream Weakness: Off-Season Limits Upside
In stark contrast to upstream strength, downstream demand remains weak, becoming the core constraint on the entire chain. July is the traditional off-season for polyester downstream, with no explosive order catalysts. Weaving data is equally concerning: in June, Jiangsu and Zhejiang weaving enterprises had an average operating load of 52.4%, up only 1 percentage point month-on-month but down 8 percentage points year-on-year.
Currently, autumn/winter fleece fabrics see some small order recovery, but the market lacks large-volume orders. Weaving enterprises are reluctant to actively raise operating rates or stock up, with overall cautious sentiment. This caution transmits to the polyester end, likely keeping polyester operating rates low. Market focus remains on upstream plant maintenance and restart dynamics.
Practical Recommendations
For Buyers - Short-term PX and PTA are likely to remain strong; consider locking near-month contracts, but be wary of supply increases if processing fees rise and maintenance willingness weakens. - MEG has clear expectations of future import surges, with prices likely under pressure after August. Adopt a rolling strategy of buying near-term and waiting on far-term positions, avoiding bulk stockpiling. - Closely monitor crude oil price fluctuations and Iran waterway control dynamics; upstream cost variables can quickly alter the current supply-demand balance.
For Foreign Trade Enterprises - Export quotations should account for short-term raw material price strength, but weak downstream demand limits pass-through. Consider floating pricing mechanisms with clients. - For European and American markets, watch for small order recovery signals in autumn/winter fleece fabrics, but avoid aggressive capacity expansion until clearer bulk order support emerges. - Leverage the current chain divergence to sign short-term supply assurance agreements with upstream suppliers while negotiating more flexible delivery cycles with downstream customers to hedge against price volatility.
In summary, the July polyester chain sees upstream supply contraction logic from concentrated maintenance, providing strong short-term price support. However, downstream is in a traditional off-season with no substantive demand improvement. The divergence in upstream-downstream supply-demand dynamics will continue to tug at the market. Whether the medium-to-long-term market can sustain an uptrend depends crucially on end-order recovery pace, with crude oil macro volatility, maintenance execution, and restart progress as key variables. Industry participants must track multi-dimensional supply-demand changes to find certainty amid the standoff.