Polyester Promotions Fail to Ease Weaving Dilemma: How Textile Firms Navigate Cost Games in H2

A polyester factory promotion pushed the sales-to-production ratio to 153.8%, briefly releasing downstream restocking demand. Yet this seemingly strong figure masks a fierce standoff across the textile supply chain—international crude oil prices have fallen back to pre-Spring Festival levels, customers are pressing for price cuts using oil charts, and weaving mills are trapped by high-cost raw material inventories.

Disrupted Cost Transmission and Promotion Logic

Crude oil, as the anchor of the polyester chain, should have driven down polyester filament yarn quotes. Instead, mills offered limited discounts through promotions rather than direct price cuts. This reflects a margin calculus: at 70% capacity utilization, profit per ton reaches 500 yuan; discounting to boost volume could slash that to 100 yuan. More critically, current inventory costs are locked in at earlier high raw material prices—selling at a loss would crystallize book losses.

Polyester mills have learned from past 'anti-involution' efforts and now prioritize margin protection over volume. The industry consensus favors reduced runs to defend price floors, even if it means slower turnover. This strategy stabilizes the price floor in the short term but makes downstream restocking rhythms harder to predict.

Weaving Mills' Hesitation and Capacity Decision Dilemma

Downstream weaving mills didn't rush to buy after one promotion. Market confidence is fragile—the previous promotion saw only 70% sell-through; this time, the 153.8% figure likely reflects pent-up demand release. Customers expect further price declines, reinforcing a 'wait-and-see' attitude: every discount signals a potential lower point.

July is traditionally the window for stocking autumn/winter fabrics, but this year's operating rates are notably lower than last year. Unlike 2025's passive cuts due to inventory overhang, current reductions are more proactive—volatile raw material prices make mills reluctant to add capacity. Capacity decisions have become a gamble: will the fabrics produced today be in demand next season?

Two H2 Scenarios and Supply Chain Risks

Optimistic scenario: demand recovers in H2, low industry inventories allow fabric prices to rebound, and cautious stockpilers turn inventory into profit. Pessimistic scenario: fabric prices stay low or fall further, making current production a deeper loss in the second half.

The key variable is the pace of end-order recovery. European and US restocking demand hasn't materialized significantly, and Southeast Asian textile capacity adds competitive pressure. Domestic mills face not just cost games but also demand-side uncertainty.

Practical Recommendations

For Purchasers - Build positions in batches during promotional windows to smooth cost exposure; the mills' capacity-limiting strategy makes deep price cuts unlikely. - Monitor crude oil and PTA futures correlation—increase procurement when oil prices stabilize or rebound to lock in relatively low costs. - Negotiate price protection clauses with suppliers to secure retroactive discounts within promotion cycles.

For Exporters - Shorten quotation validity to 3-5 days and embed raw material volatility risk into contract terms to avoid margin erosion from customer price pressure. - Proactively share raw material cost breakdowns with clients, using facts like mill capacity limits and promotional discount caps to justify pricing rather than passively accepting cuts. - Focus on differentiated products such as functional or recycled polyester yarns, which are less sensitive to bulk raw material swings and offer more stable margins.