In early July, a round of polyester factory promotions pushed the average sales-to-production ratio of DTY sample enterprises to 153.8%, a figure that looks impressive on the surface. However, this restocking wave has not altered the cautious tone across the textile supply chain—downstream weaving enterprises purchased limited volumes, and market confidence remains fragile.
Behind this data lies the ripple effect of international crude oil prices falling from their yearly highs back to pre-Spring Festival levels. As the cost anchor for the polyester chain, weaker oil quickly transmitted to downstream buying behavior, with customers increasingly demanding corresponding price cuts on fabrics.
Cost Transmission Fractures, Each Side Has Its Own Calculus
The pricing strategy of upstream polyester plants is undergoing a subtle shift. The old model of cutting prices to boost volume is being replaced by a profit-first approach—industry public data shows average operating rates at around 70%, with plants preferring to control output rather than slash prices significantly.
This 'run less, don't sell cheap' logic rests on two pillars: first, existing polyester inventory was mostly produced from high-cost raw materials, leaving thin paper profits that would turn into losses with price cuts; second, after years of destructive price wars, the industry has tasted the benefits of maintaining price floors through 'anti-involution'.
Downstream weaving enterprises face a different dilemma. Customers demand fabric price reductions citing falling crude oil, but fabric prices did not fully track the earlier raw material surge—weavers absorbed a significant portion of the increase, compressing their margins to extremely low levels. Now that upstream price cuts are limited and delivered through 'promotions,' downstream can hardly achieve equivalent cost relief.
Stockpiling Season Cools, Weavers Enter 'Betting on the Market' Dilemma
Historically, July is a critical window for weavers to stock up for second-half autumn/winter fabrics. But the market is showing anomalies: capacity cuts are severe, and restocking appetite is weak.
Unlike last year, when capacity cuts stemmed from inventory gluts after full-capacity H1 production, this year weavers are 'spooked' by volatile raw material prices and dare not ramp up production plans easily. After polyester promotions, the downstream's first reaction is not to buy but to think 'prices might fall further'—a wait-and-see attitude that was already evident in the previous promotion, which achieved only a 70% sales ratio.
China Customs data indicates that terminal apparel export orders showed signs of slowing in late Q2, further dampening weavers' stockpiling confidence. The market is forming a 'thin-margin game' pattern: upstream refuses to cut prices to move volume, downstream refuses to chase prices to build inventory, each waiting for the other to blink.
Second-Half Outlook: Two Scenarios, One Key Variable
For weaving enterprises, capacity decisions over the next two months feel more like a gamble.
In the optimistic scenario, H2 domestic and export orders recover, leading to a temporary supply squeeze against a low-inventory backdrop, fabric prices rebound short-term, and existing inventory turns profitable. In the pessimistic scenario, demand remains weak, fabric prices stay low or fall further, and the more you produce now, the bigger the loss in H2.
Industry analysts point out that the key variable to break the current deadlock is the actual pace of end-demand recovery and whether polyester plants can find a new balance between profitability and market share. For buyers and foreign trade firms, the immediate need is fine-tuned inventory and order rhythm management, not a blind bet on a market reversal.