The polyester industry chain is currently experiencing a stark divergence. Upstream PX and PTA prices are surging due to concentrated plant maintenance that has sharply reduced supply, while downstream polyester and weaving sectors are entering a traditional off-season with sluggish demand and low operating rates. This 'hot upstream, cold downstream' pattern has become the core contradiction driving market dynamics.
Upstream Supply Tightens: PX Operating Rates Could Hit Historic Lows
The primary driver of this upstream price rally is active supply contraction. Multiple major PX plants in China entered maintenance or reduced operating rates in late June, fueling expectations of inventory drawdown in July. Shenghong's 4 million ton/year PX unit has fully shut down for an expected 45-day maintenance period. Hainan Refining & Chemical has reduced output on one 660,000 ton/year PX line, which will operate at low rates for three months. Industry institutions predict that domestic PX operating rates will fall below 60% in early July, the lowest level on record. This sharp supply contraction directly supports PX prices, which are leading the chain's gains.
PTA is also facing persistently low capacity utilization. Since April, the domestic PTA industry has entered a massive maintenance cycle, involving a peak capacity of over 22 million tons, accounting for more than 20% of national capacity. Daily operating rates bottomed out at around 60%, the lowest since October 2021. Maintenance plans remain dense through June and July, with little prospect of a near-term recovery in utilization rates. This significantly compresses PTA supply elasticity, providing strong price support.
MEG Divergence: Domestic Contraction vs. Import Surge
Monoethylene glycol (MEG) presents a more complex supply-demand divergence. In July, domestic coal chemical and refinery units are undergoing concentrated maintenance and rate reductions, leading to a clear decline in domestic production. This tightening of local supply provides some price support. However, imports are showing a low-then-high pattern. Data shows MEG imports totaled 200,000 tons in May, with June and July maintaining similar levels. But institutions estimate that August port imports will double to 400,000 tons. Improved maritime passage conditions will significantly ease domestic supply tightness. This tug-of-war between short-term domestic contraction and long-term import growth keeps MEG prices in a weak, volatile range, with a turnaround dependent on downstream demand recovery.
Downstream Demand Weak: Weaving Operating Rates Plunge Year-on-Year
In stark contrast to upstream strength, downstream polyester and weaving markets are enduring a traditional off-season. July is a consumption off-season for polyester end-users, lacking explosive demand drivers. Specifically, average operating rates for Jiangsu-Zhejiang weaving mills in June were 52.4%, up only 1 percentage point month-on-month but down 8 percentage points year-on-year. While there is slight recovery in orders for autumn/winter fleece fabrics, the market lacks large-volume orders. Weaving mills show weak willingness to proactively increase operating rates or build inventory, with cautious sentiment prevailing. This demand weakness is the core factor capping the entire chain's price upside.
Industry Impact: Short-Term Strength vs. Medium-Term Uncertainty
In summary, upstream raw materials in the polyester chain in July have formed a solid supply contraction narrative through concentrated plant maintenance, providing strong short-term price support. PX and PTA are likely to maintain their relatively strong run. However, downstream end-users are in a traditional off-season with no substantial demand improvement, and the divergence between upstream and downstream supply-demand fundamentals will continue to pull market directions in opposite ways. For MEG, gains will be limited by the overhang of future import increases.
Whether the market can sustain a prolonged rally in the medium term depends critically on the pace of end-user weaving order recovery. Additionally, crude oil price volatility, the execution of plant maintenance, and restart schedules are all key variables influencing the chain's pricing. Industry participants must continuously monitor multi-dimensional supply-demand changes to navigate potential market reversals.