The Game Behind Polyester Promotions: Textile Firms' Dilemma in the Second-Half Chessboard

On July 6, a polyester plant promotion pushed the average sales-to-production ratio of polyester filament yarn sample enterprises to 153.8%, with downstream users moderately replenishing stocks and local markets showing signs of recovery. But behind these numbers lies a complex landscape: falling international oil prices have triggered aggressive price-cutting demands from customers, leaving textile firms in a dilemma between maintaining production and reducing output—a gamble on the second half of the year.

Upstream Calculus: Output Cuts to Protect Margins, Not Price Cuts to Boost Volume

Polyester plants did not significantly lower quoted prices in this promotion, opting instead for limited promotional discounts. The reason: with plant utilization at 70%, profit margins remain acceptable; cutting prices to boost volume might increase sales but would sharply reduce paper-thin margins, especially since current inventory uses high-cost raw materials, making actual costs higher than book calculations. These stocks must be sold slowly.

More fundamentally, polyester plants have tasted the benefits of "anti-involution" in recent years and are reluctant to return to endless price wars. The core strategy is to cut output to maintain price floors rather than fall into a cycle of selling more at a loss.

Downstream Hesitation: Price Cuts Actually Deepen Wait-and-See Attitude

For weaving mills, polyester filament price cuts did not directly translate into buying enthusiasm. Industry public data shows the last promotion achieved only a 70% sales ratio, indicating fragile market confidence—when prices loosen, downstream expects further declines, leading to continued waiting.

Currently entering July, traditionally a stocking period for H2 autumn/winter fabrics, weaving mills have been traumatized by violent cost fluctuations. Raw material prices swing wildly, making companies reluctant to increase positions. Capacity cuts are severe, unlike last year when oversupply forced reductions—this year, cost uncertainty is the driver.

Two Scenarios for H2: Optimistic vs. Pessimistic Bets

The market is in its weakest period of the year, with order volumes low. But textile firms cannot completely ignore H2 preparation. China Customs data and industry information suggest H2 demand recovery is possible, but only if the market sees a turnaround amid low inventories, with fabric prices rebounding short-term and inventories turning into assets.

The pessimistic scenario: fabric prices remain flat or fall further; the more produced now, the bigger the loss in H2. For many weaving mills, deciding capacity for the next two months is essentially betting on whether their products will suddenly become hot sellers in H2.

Practical Advice

For Buyers - Current polyester filament promotions are limited, and polyester plants are determined to cut output to protect margins; avoid waiting for deep discounts, consider phased restocking to lock in costs. - Monitor international oil price trends and U.S.-Iran negotiations; if crude stabilizes, the promotion window may narrow. - Negotiate short-term price-lock agreements with upstream suppliers to avoid frequent fabric price adjustments due to raw material volatility.

For Foreign Trade Firms - With exchange rates and raw material costs fluctuating, use a combination of forward forex hedging and raw material hedging to manage risk. - H2 orders from Europe and the U.S. remain uncertain; prioritize short-cycle, small orders to avoid long-term price locks that could be eroded by raw material swings. - Monitor weaving capacity shifts in Southeast Asia; if domestic output cuts persist, some orders may relocate—prepare alternative supplier relationships in advance.