On July 6, a polyester factory promotion drove the average sales-to-production ratio of polyester filament yarn among sample companies to 153.8%, prompting moderate restocking by downstream users. Yet this figure cannot mask deep market anxiety—international oil prices have continued to decline since US-Iran negotiations, falling back to pre-holiday levels, while customers are aggressively demanding price cuts. Textile enterprises are caught between reducing production and building inventory.
Upstream Caution: Better to Run Less Than to Sell Cheap
Polyester plants have room to cut prices but are choosing "promotions" over broad reductions. Each promotion offers only limited discounts, never a one-step price cut. The reason: most polyester units are currently running at only about 70% capacity. At this level, per-ton profit is around 500 yuan. If they were to cut prices to boost volume, profit could plummet to 100 yuan or less. More critically, current inventory of polyester filament yarn was produced using high-cost raw materials, so any significant price cut would only amplify losses.
Industry data shows that after years of "anti-involution," polyester plants are unwilling to return to endless price wars. They prefer to control output and defend price floors rather than fall into a "sell more, lose more" trap. This strategy reflects a rigid pursuit of profit and cautious management of market expectations.
Downstream Wait-and-See: Price Cuts Actually Fuel Hesitation
For weaving enterprises, lower polyester prices have not immediately translated into buying enthusiasm. On the contrary, price softening has led downstream buyers to expect further declines, so they continue to wait. While the July 6 promotion pushed the sales-to-production ratio above 100%, the previous promotion saw only 70% of output sold. Market confidence is fragile; price cuts only reinforce waiting psychology.
It is now early July, traditionally the time to stock up on fabrics for the autumn/winter season. But weaving mills are generally underutilizing capacity—not because of inventory pile-ups, but because raw material price volatility has made them cautious. No one wants to increase production only to see costs swing wildly. Deciding how much to produce has become a gamble: betting that the specific products being made will suddenly become popular in the second half of the year.
Two Scenarios for the Second Half: Optimism vs. Pessimism
The market is in its quietest period of the year, with limited orders. But textile companies cannot afford to do nothing for the rest of the year.
- Optimistic scenario: Demand recovers in H2, the market turns on low inventory, fabric prices rebound briefly, and inventory becomes valuable.
- Pessimistic scenario: Fabric prices stay flat or fall further; the more you produce now, the more you lose later.
Feedback from industrial clusters like Shengze and Keqiao shows that most weaving mills are adopting a cautious stance. Some are cutting production to preserve cash flow; others are making small batches to bet on autumn/winter demand recovery. Both strategies carry risks, depending on product mix, customer orders, and cash flow.
Practical Advice
For Buyers - Polyester promotions are becoming more frequent, but each discount is limited. Buyers should avoid chasing lower prices blindly; instead, restock in batches based on actual orders to avoid missing delivery deadlines. - Monitor raw material inventory and cost accounting. If you have high-cost stock, prioritize consuming it to avoid cost inversion. - Consider long-term purchase agreements with polyester plants to lock in part of your volume and reduce uncertainty from short-term price swings.
For Foreign Trade Companies - Overseas customers are increasingly price-sensitive. Include raw material cost fluctuation clauses in quotes to avoid being forced into "matching" price cuts when oil prices fall. - Use the current off-season to optimize product mix—develop differentiated fabrics (e.g., functional, recycled fibers) to strengthen bargaining power. - Monitor exchange rates and shipping costs. If demand picks up in H2, logistics costs may rise; secure freight space and exchange rates early.
There is no single answer to the textile industry's current puzzle. But one thing is clear: in a volatile pricing environment, companies that control inventory more precisely and adjust capacity more flexibly will have the upper hand.