On July 6, polyester plant promotions pushed the average sales-to-production ratio of polyester filament sample enterprises to 153.8%. However, behind this seemingly recovering figure lies a complex landscape of customer price-cutting spurred by falling international crude oil prices. For most textile mills, the pressing issue is not whether to operate, but how to choose between production cuts and stockpiling—a gamble on H2 market conditions.
Upstream Rationality and Constraints
Polyester plants have shown rare restraint in pricing strategy. After crude oil prices fell from post-Iran-US-talks highs to pre-Spring Festival levels—oil being the key indicator for the polyester chain—a more significant feedstock price drop might have been expected. Yet plants have avoided direct price cuts, opting instead for limited "promotions" with each discount kept conservative.
The underlying logic is profit structure rigidity. At 70% capacity utilization, a plant can maintain a margin of about RMB 500/ton; aggressive price cuts to boost sales might slash that margin to just RMB 100/ton. Crucially, existing polyester filament inventory was produced using high-cost raw materials, making its book cost much higher than current replacement cost. This stock must be liquidated slowly.
More fundamentally, the polyester industry has tasted the benefits of capacity control and price maintenance after two years of "anti-involution." The era of relentless price wars led to industry-wide losses; now plants prefer reduced runs to defend price floors, avoiding the trap of "selling more, losing more."
Downstream Caution and Dilemma
Weaving mills have reacted with even greater caution. The polyester filament price drop did not trigger expected bulk buying. While the latest promotion pushed sales above 100% of production, the previous one hit only 70%—a clear sign of fragile market confidence.
For mills, lower feedstock prices have actually reinforced wait-and-see behavior—expectations of further declines delay procurement decisions. With current operating rates already low, actual raw material demand is limited; even promotions struggle to trigger large-scale restocking.
July is traditionally the peak season for stocking autumn/winter fabrics, but this year's capacity idling is more severe than last year. Last year's stoppage stemmed from inventory overhang after full-capacity H1 production; this year, mills are paralyzed by feedstock cost volatility. They dare not add capacity, fearing that any fabric produced might become dead stock if H2 demand disappoints, directly eroding already razor-thin margins.
Two Scenarios for H2
The market is in its annual seasonal trough, with orders scarce. Yet mills cannot fully ignore H2 preparation. Industry views on the outlook are sharply divided.
The optimistic scenario: H2 end-demand recovers, creating a supply gap amid low inventory; fabric prices rebound short-term, turning existing stocks into high-profit assets.
The pessimistic scenario: fabric prices stay flat or fall further; the more produced now, the heavier the H2 loss.
For the next two months, capacity decisions for weaving mills are essentially bets—on whether their products will suddenly gain market traction in H2. This uncertainty makes both "cutting production" and "stockpiling" risky.
Deep Structural Tensions
This standoff exposes chronic structural issues in the polyester-textile chain. Upstream plants defend margins through output control; downstream mills dare not expand amid cost and demand pressure; profit distribution mechanisms remain unaligned.
For buyers, current feedstock prices are relatively low, but upstream output cuts could tighten supply later. For exporters, under dual pressure from oil price volatility and customer price demands, quoting strategies need flexibility, while monitoring external costs like exchange rates and freight.