July's polyester chain is staging a classic upstream-downstream tug-of-war. Upstream PX and PTA are rallying strongly on concentrated unit maintenance, while downstream weaving is mired in the traditional off-season, with operating rates sharply lower year-on-year. This structural supply-demand divergence is making the market unusually tense.
Upstream Supply Contraction: PX Operating Rate at Historic Low
Supply-side contraction is the core driver of this raw material rally. In late June, several domestic PX units entered maintenance, intensifying expectations of inventory drawdown in July. Shenghong's 4 million-ton-per-year PX unit has fully shut down for a 45-day turnaround, while Hainan Refining & Chemical has cut output on a 660,000-ton-per-year PX line for up to three months.
As a result, industry agencies forecast that domestic PX operating rates will fall below 60% in early July, a historic low. This sharp supply contraction directly supports PX strength, with closing data showing PX up 1.37%, leading the entire chain. For traders and downstream polyester plants, this means higher spot procurement costs in the short term, necessitating early inventory locking to hedge against price increases.
PTA Maintenance Wave Continues, Capacity Utilization Remains Low
The PTA sector began a massive maintenance cycle in April, with peak capacity affected exceeding 22 million tons, over 20% of national capacity. Daily operating rates bottomed near 60%, the lowest since October 2021. Maintenance plans remain dense in June and July, so short-term utilization is unlikely to rebound significantly.
PTA prices rose 1.26%, moving in tandem with PX. However, two variables warrant attention: first, if processing margins widen, plants may reduce maintenance, so actual execution must be monitored; second, the restart pace of offline units will directly impact short-term supply and price volatility. For polyester plants, current PTA prices are relatively high, so purchases should be timed carefully around unit dynamics to avoid concentrated restocking at peaks.
MEG Supply-Demand Divergence: July Domestic Output Shrinks, August Imports Double
MEG's July supply-demand picture shows a phased divergence. Domestic coal-chemical and refinery units are entering concentrated maintenance, with monthly output expected to decline significantly, providing some price support from tighter local supply. However, imports show a low-then-high trend.
Data shows May MEG imports at 200,000 tons, with June and July at similar levels. But agencies estimate August port imports will double to 400,000 tons, easing domestic tightness in H2. This means MEG has some support in July but is capped by forward import pressure, maintaining weak volatility. A reversal requires downstream demand recovery; short-term conditions lack catalysts for a significant rally.
Downstream Weaving Off-Season: Operating Rate Down 8 Percentage Points YoY
Weak demand is the key constraint on the chain's upside. July is a traditional off-season for downstream polyester consumption, with no explosive demand catalysts. Weaving data is also weak: June Jiangsu-Zhejiang weaving operating rates averaged 52.4%, up only 1 percentage point MoM but down 8 percentage points YoY.
Currently, autumn/winter fleece fabrics see some small-order recovery, but the market lacks bulk orders. Weaving plants are reluctant to raise operating rates or build inventory, with overall cautious sentiment. The H2 inflection point awaits a concentrated release of new orders. For polyester plants, this means raw material price increases are hard to pass downstream, likely squeezing margins further.