The polyester chain is experiencing a significant divergence: upstream raw materials PX and PTA are strengthening due to massive plant maintenance, while downstream weaving is mired in the off-season, with weak demand becoming the core constraint on the entire chain. This structural mismatch is reshaping market dynamics from July through the second half of the year.
Upstream Supply Contraction: Plant Maintenance Lifts Price Floor
PX is the leader in this rally. As of early July, domestic PX operating rates are expected to fall below 60%, a historic low. The core driver is concentrated maintenance at major plants: Shenghong's 4 million mt/yr PX unit is fully shut down for about 45 days, and Hainan Refining & Chemical's 660,000 mt/yr line has entered a three-month reduced operation period. This sharp supply contraction directly supports the PX market, with prices up 1.37%.
On the PTA side, capacity utilization remains at low levels. Since April, the domestic PTA industry has launched large-scale maintenance, involving total capacity exceeding 22 million mt, over 20% of national capacity. Daily operating rates bottomed near 60%, the lowest since October 2021. Maintenance schedules remain dense in June and July, with no significant recovery in the short term. However, if processing fees continue to rise, companies' willingness to shut down may weaken—a variable worth monitoring.
MEG's supply pattern shows phased divergence. In July, domestic coal chemical and refining units are in maintenance, tightening local supply and providing price support. However, imports are low in the first half and high in the second: May imports were 200,000 mt, stable in June and July, but institutions estimate August port imports will double to 400,000 mt. This distant import increase will significantly ease domestic tightness, capping MEG gains and keeping it in weak oscillation.
Downstream Demand Weakness: Weaving Off-Season Drags on Chain Transmission
In stark contrast to upstream strength, demand is sluggish. July is the traditional off-season for polyester downstream, with no explosive positive catalysts. In June, Jiangsu-Zhejiang weaving enterprises averaged 52.4% operating rates, up 1 percentage point month-on-month but down 8 points year-on-year. Although autumn/winter fleece fabrics saw a slight recovery in niche orders, large-volume orders are lacking, leaving companies hesitant to boost production or stock up.
This means upstream price increases cannot be smoothly transmitted downstream. Polyester overall operating rates are likely to remain low, with market focus on upstream maintenance and restart dynamics. In the short term, PX and PTA are expected to stay strong, but MEG gains are capped by distant import increases. Medium-term sustainable upward movement hinges on terminal weaving order recovery.