On July 6, a polyester factory promotion boosted the average sales-to-production ratio of polyester filament yarn sample enterprises to 153.8%, with downstream users moderately replenishing inventory, finally showing signs of recovery in some markets. However, behind this number lies a chain reaction triggered by the continuous decline in international oil prices—customers, armed with crude price curves, launch wave after wave of price-cutting attacks on fabric suppliers.
Upstream Profit Arithmetic and Pricing Strategy
Polyester factories have been remarkably restrained in price cuts. With operating rates at around 70%, there is still a margin of 500 yuan per ton. If they cut prices to boost volume, sales might increase, but profits could plummet to 100 yuan per ton. More importantly, current inventory of polyester filament was mostly produced during high raw material prices, with actual costs far exceeding paper costs, meaning these goods can only be slowly digested.
Polyester factories have tasted the benefits of 'anti-involution' in recent years—the endless price wars of the past are something no one wants to revisit. They prefer to reduce operating rates and maintain price floors rather than fall back into the quagmire of selling at a loss. This strategy protects short-term profits but passes pressure downstream.
Downstream Wait-and-See Logic and Restocking Dilemma
For weaving enterprises, a drop in polyester filament prices does not automatically trigger purchases. Market confidence is fragile—once prices soften, downstream players expect further declines and continue to wait. In the previous promotion, the sales ratio was only 70%, indicating already limited demand.
July is traditionally the season for stocking autumn/winter fabrics, but this year is different. Last year, production halts were severe because factories had run at full capacity in the first half, leading to inventory accumulation. This year, it's the fear of raw material volatility that paralyzes decision-making—nobody dares to increase capacity easily. For many enterprises, how much to produce has become a gamble: betting that their products will suddenly become hot in the second half.
Asymmetric Bargaining in the Supply Chain
Falling international oil prices are the starting point of this tug-of-war. As the 'barometer' of the polyester chain, crude oil weakness directly transmits to downstream customer expectations. Customers demand 'proportional price cuts' on fabrics, but textile companies cannot simply comply—when raw material prices soared, fabric price increases were largely absorbed by manufacturers. Now that raw material prices have fallen, customers demand full concessions, leaving already razor-thin margins.
Polyester factories' price cuts are conservative, appearing as 'promotions' rather than direct reductions, with each round limited in scope. This strategy essentially defends their profit floors but also deepens mistrust and wait-and-see behavior across the chain.
Second Half Outlook: Optimistic vs. Pessimistic Scenarios
The optimistic scenario: second-half demand recovers, the market turns around amid low inventory, fabric prices rebound in the short term, and inventory becomes a 'hot commodity.' The pessimistic scenario: fabric prices remain flat or fall further, and the more produced now, the bigger the losses later.
The market is currently in its weakest period of the year, with limited orders. But textile enterprises cannot entirely ignore preparations for the second half—the key lies in balancing risk and opportunity.