On July 6, polyester factories pushed the average daily sales rate of polyester filament yarn to 153.8% through promotions, prompting moderate restocking by downstream users. While this figure appears to signal a recovery, the previous promotion achieved only 70%, indicating that market confidence remains fragile.
Cost Transmission Fails, Upstream and Downstream in Expectation Gap
International crude oil prices fell from the year's high after U.S.-Iran talks, with the decline approaching pre-Spring Festival levels. As the starting point of the polyester chain, weaker oil should directly lower polyester costs and then pass through to fabric prices. But the actual transmission chain shows significant blockage: polyester mills have not actively cut list prices, instead offering limited-time promotions with modest reductions each time.
This 'promotion rather than price cut' tactic reflects upstream determination to defend margins. Current polyester plant utilization is around 70%; running full capacity with price cuts could shrink paper profits from 500 yuan per ton to just 100 yuan. More critically, existing polyester inventory was produced using high-cost raw materials, and selling at current spot prices would realize actual losses. Polyester mills prefer to sacrifice operating rates rather than return to the 'sell more, lose more' price war of previous years.
Downstream weaving mills hold a completely different mindset. After seeing crude oil decline, customers immediately demanded proportional fabric price cuts. But textile mills had already absorbed part of the raw material price increase during the upcycle, leaving razor-thin margins. Now with limited upstream price relief but full downstream demands for concessions, negotiations have reached a stalemate.
Weaving Side: Output Reduction Becomes Rational Choice
July is the traditional off-season, with order volumes at a year-low. Normally, this is when weavers stock up for autumn-winter fabrics, but this year is different. Last year's shutdowns were due to overcapacity and inventory buildup from first-half full production; this year, mills are 'scared' by raw material volatility—polyester prices swing frequently, making it risky to increase inventory or loom utilization.
The promotion-driven sales rate above 100% appears to signal demand release, but most purchases are forced restocking. With low operating rates, actual raw material consumption capacity is limited. Each promotion triggers a new round of wait-and-see: price loosening reinforces expectations of further declines, further suppressing buying interest. This creates a 'more promotion, more wait-and-see' cycle between upstream and downstream.
Weaving mills' decision logic has shifted: they no longer pursue full production and sales, but actively control capacity and place bets on product mix.
Second Half Outlook: Two Scenarios, One Bet
The market holds two mainstream views on the second half. Optimistic scenario: autumn-winter orders recover, low inventories support short-term fabric price recovery, turning current inventory into profit. Pessimistic scenario: fabric prices remain low or fall further, making current production a loss-making bet.
Weavers' capacity decisions for the next two months essentially bet on whether their chosen fabric varieties will see demand in the second half. This 'variety bet' is not blind—mills base decisions on past autumn-winter bestsellers, current raw material spreads, and end-brand order signals. But uncertainty remains high, especially given volatile oil and polyester prices.