On July 6, a new round of polyester plant promotions pushed polyester filament yarn sales to a production-to-sales ratio of 153.8%, with downstream users modestly replenishing stocks. While this figure hints at a recovery, it masks deep tensions along the industrial chain—international crude oil prices have fallen back to pre-Spring Festival levels, customers are demanding price cuts, and textile firms face a tough choice between reducing output and building inventory.
Cost Game Behind the Promotions
Crude oil, as the 'barometer' of the polyester chain, transmits its weakness quickly downstream. Customers demand corresponding cuts in fabric prices, but textile firms are caught in a bind: when raw material prices surged, fabric price increases were largely absorbed by the firms themselves, leaving thin margins. Now, polyester plants respond with 'promotions' rather than direct price cuts, and each reduction is limited. This conservative strategy stems from upstream profit calculations: running plants at 70% capacity yields a margin of 500 yuan, but discounting to boost volume may slash that to 100 yuan. Moreover, existing polyester yarn inventory is based on high-cost raw materials and cannot be liquidated quickly.
Polyester plants have learned from 'anti-involution' and refuse to return to price wars, preferring to cut operating rates to defend price floors. This leaves weaving firms facing rigid raw material costs and difficulty in lowering fabric prices.
Weaving Sector: Wait-and-See Dominates, Stock-Up Sentiment Weak
Polyester price cuts have not sparked downstream buying; instead, they reinforce a wait-and-see attitude. The July 6 promotion saw sales exceed production, but the previous promotion only reached 70%. Weaving plants' operating rates are already low, limiting actual raw material demand. The market is in a traditional off-season with few orders, and firms generally adopt a 'play it by ear' approach.
Unlike last year, when firms proactively reduced output due to inventory overload from full production, this year they are 'scared' by extreme raw material price volatility and hesitant to add capacity. Capacity decisions have become a gamble: will the products made now be in demand in the second half? No one can predict.
Second-Half Outlook: Two Scenarios
The market is at its weakest point of the year, but textile firms cannot completely ignore preparation for the second half. The optimistic scenario: demand picks up, fabric prices recover short-term amid low inventory, turning stocks into profit. The pessimistic scenario: fabric prices stay low or fall further, making current production a loss leader.
Capacity deployment over the next two months is essentially a bet on market direction. The upstream-downstream standoff is unlikely to break soon: polyester plants won't concede margins, and weaving firms won't take the bait. The key to breaking the deadlock is whether end-user demand sees real improvement in autumn and winter.