A sharp rebound in international oil prices overnight, coupled with the US revocation of Iran's oil sales waiver and resulting tensions, has provided strong cost support for the polyester chain. On July 8, the entire polyester chain rallied, with most products closing over 2% higher. This rally is not purely sentiment-driven; behind it lies an unprecedented wave of concentrated maintenance in the PX and PTA sectors that is reshaping supply and demand dynamics.
Dual Tightening of Cost and Supply
PX accounts for over 90% of PTA production costs, and its price fluctuations directly impact the profitability of the polyester chain. Currently, PX plants are in their annual maintenance window, with multiple million-ton units from Shenghong Refining, Hainan Refining, and Zhejiang Petrochemical halting production. This involves over 9 million tons of capacity, with monthly output losses of 80 to 90 million tons. PX industry operating rates have fallen to 59.4%, while Asia's overall rate has also dropped to 56.6%, both multi-year lows. This means PX supply will be difficult to recover in the short term, and cost support for PTA and downstream polyester products will persist.
Maintenance in the PTA sector is equally striking. Since April, China's PTA industry has seen an unprecedented wave of concentrated maintenance, with total capacity involved exceeding 22 million tons, over 20% of the country's total capacity. PTA daily capacity utilization once dropped to about 60%, the lowest since October 2021. Even in June and July, the scale of pending maintenance remains large. Based on maintenance schedules, PTA capacity utilization will remain low. Two points need watching: whether the actual execution rate of PTA maintenance will decline after processing fees recover to high levels, and the restart progress of idled units.
Destocking Cycle Continues, Inventory Below Two-Year Average
The effects of supply contraction are already reflected in inventory data. As of early July, domestic PTA social inventory stood at 3.05 million tons, down 1.4 million tons from the April peak. The destocking cycle has lasted three months, with absolute inventory levels below the same period in the past two years. This means raw material days available for downstream polyester plants are decreasing. Once demand picks up, restocking flexibility will be very limited, and upward price pressure will quickly transmit.
Demand has not yet entered the traditional peak season, but recovery expectations are materializing. Currently, the polyester industry's comprehensive operating rate is 80%, a low level for recent years, while terminal yarn and fabric mills have raw material inventories at three-year lows. Starting in August, as the autumn/winter order season for textiles arrives, yarn and fabric mills will inevitably restock, pushing polyester operating rates higher. Although overall overseas textile and apparel demand is weak, domestic seasonal restocking is sufficient to absorb marginal supply increases, preventing a rapid shift to a loose supply-demand balance.
Short-Term Strong, But Watch Variables After Processing Fee Recovery
Industry insiders generally believe that in the short term, cost support is solid, PX and PTA concentrated maintenance brings supply contraction, combined with continued destocking and firm spot basis, PTA futures will continue to run strong. However, two variables need caution in the medium term: first, after processing fees recover to high levels, previously idled units may restart quickly, disrupting the destocking rhythm; second, if overseas demand remains weak, the sustainability of domestic restocking will be tested.
For downstream buyers in the polyester chain, with current prices running strong, they should appropriately increase raw material reserves to cope with potential supply tightness during the autumn/winter peak season. For foreign trade companies, attention should be paid to international oil price fluctuations and geopolitical risks affecting export costs of polyester products, and reasonable locking of forward order prices is advisable.