In early July, the polyester chain experienced a feedstock-led price rally, with PX and PTA rising 1.37% and 1.26% respectively, significantly outperforming downstream polyester products. This rally was driven not by demand but by temporary supply contraction from concentrated plant maintenance.
Supply Contraction Drives Upstream Rally
PX led the charge. By end-June, Shenghong's 4-million-ton/year PX plant fully shut down for about 45 days, while Hainan Refining's 660,000-ton/year line cut output for three months. Industry estimates suggest domestic PX operating rates will fall below 60% in early July, a historic low. This sharp supply contraction directly supports PX prices.
PTA faces similar pressure. Since April, a massive maintenance cycle has idled over 22 million tons of capacity, more than 20% of national total. Daily operating rates bottomed near 60%, the lowest since October 2021. Dense maintenance schedules in June and July mean capacity utilization will not rebound soon.
For buyers, the PX and PTA tightness will likely persist through July. If processing margins continue to rise, some plants may postpone maintenance—watch actual implementation and restart progress closely.
MEG Faces Import Flood
MEG's supply picture is more complex. Domestic coal-chemical and refinery units are in concentrated maintenance, reducing local output and providing some price support. But imports are rising as shipping lanes improve.
Data show May MEG imports at 200,000 tons, similar levels in June and July, but August imports are expected to double to 400,000 tons. The second-half import surge will ease domestic tightness and cap MEG gains. Macro headwinds keep MEG in weak oscillation; a reversal requires downstream demand recovery.
Weak Downstream Demand Caps Upside
Demand weakness is the core constraint. July is a traditional off-season for polyester downstream, lacking catalysts. Weaving data confirms: June Jiangsu-Zhejiang weaving operating rates averaged 52.4%, up only 1 percentage point month-on-month but down 8 points year-on-year.
Autumn/winter fleece fabrics see modest order improvements, but large batch orders are absent, leaving mills hesitant to raise operating rates or build inventory. Industry sentiment is cautious; a market turnaround awaits new order releases.
For exporters, the contradiction between rising feedstock costs and weak demand compresses margins. Recommendations: lock in forward feedstock contracts cautiously, avoid chasing highs, and monitor autumn/winter fabric order signals.
Outlook and Strategic Recommendations
July's polyester chain shows clear supply-demand divergence: upstream benefits from maintenance-driven supply contraction, supporting short-term prices; downstream languishes in off-season demand weakness. PX and PTA will remain strong, while MEG gains are capped by import expectations.
Medium-term sustainability depends on downstream order recovery. Key variables include crude oil volatility, maintenance execution, and restart timing.