Polyester Chain Upstream Supply Tightens Boosts Prices, Downstream Off-Season Demand Drags Divergence

In the first week of July, domestic polyester chain upstream PX and PTA prices rose simultaneously, with PTA up 1.26% and PX up 1.37%, significantly outperforming downstream polyester products. The core driver is not demand recovery but concentrated supply contraction on the upstream side.

Supply Contraction: PX Operating Rate May Hit Historic Low

PX leads the rally. Industry data shows that at end-June, Shenghong's 4 million-ton/year PX plant fully shut down for about 45 days; Hainan Refinery's 660,000-ton/year line entered load reduction for 3 months. Multiple major unit overhauls push early July domestic PX operating rate below 60%, a historic low.

Sharp supply contraction directly supports PX strength, also driving PTA upward. Since April, PTA industry has launched large-scale concentrated maintenance, with total capacity involved exceeding 22 million tons, over 20% of national capacity. Daily operating rate bottomed near 60%, the lowest since October 2021. Maintenance plans remain dense in June-July, with short-term capacity utilization unlikely to recover significantly.

For buyers, this means short-term supply tightness for PX and PTA is locked in, prices prone to rise. However, processing fee trends should be monitored — if fees keep rising, some plants may postpone or cancel maintenance, altering supply expectations.

MEG: Import Surge Caps Gains

MEG shows phased supply-demand divergence in July. Domestic coal chemical and refining units enter concentrated maintenance, with monthly output expected to decline, providing some price support. But import trends go opposite: data shows May MEG imports at 200,000 tons, June-July similar, with institutions forecasting August port imports doubling to 400,000 tons.

This means July MEG prices, though supported by domestic supply contraction, face clear pressure from August import surge, maintaining weak oscillation. A reversal awaits downstream demand recovery.

Demand Drag: Off-Season and Weaving Weakness

Weak demand remains the core constraint on the chain's upside. July is traditional off-season for polyester downstream, lacking explosive demand catalysts. Weaving data confirms: June Jiangsu-Zhejiang weaving enterprises' average operating load was 52.4%, only up 1% MoM but down 8% YoY.

Currently, autumn/winter fleece fabrics see localized order pickup, but lack bulk orders. Weaving enterprises show weak willingness to raise operating rates or stock up. Industry sentiment is cautious, with the second-half turning point awaiting new order release signals.

For polyester plants, upstream raw material price hikes amid weak downstream demand mean profit margins may be further squeezed. If terminal orders stay sluggish, polyester operating rates will likely remain low.

Practical Recommendations

For Buyers - Short-term PX/PTA strong trend unchanged; consider locking July cargo early to avoid further price upside. - MEG August import surge is clear; watch late July to early August for potential price dips after import release. - Closely monitor PTA processing fee changes and plant restart progress; if fees keep rising, some maintenance may be postponed, altering supply expectations.

For Weaving Enterprises - July off-season order recovery is limited; control raw material inventory levels to avoid high-price stocking. - For autumn/winter fleece orders, moderate stocking is okay, but base on actual orders, avoid blindly expanding operating rates. - Monitor brand ordering pace; second-half turning point likely after September, when procurement can be stepped up.