At the close of early trading on July 14, China's domestic futures market saw a broad rally in polyester chain contracts. Staple fiber futures surged 3.77% to 7372 yuan per ton, while PTA rose 3.52% to 5824 yuan. Bottle-grade chip contracts jumped 4.31% to 7162 yuan. In contrast, cotton yarn edged up only 0.24% and cotton gained a mere 0.06%.
This divergence is not accidental. The strong performance of staple fiber and PTA is driven by rising upstream raw material costs and downstream restocking demand. Recent PX price increases, fueled by a rebound in international oil prices, have compressed PTA processing margins, leading to increased plant maintenance and tighter supply. Meanwhile, staple fiber inventories have fallen from highs, prompting some mills to raise prices and destock, shifting market sentiment from pessimism to cautious optimism.
Underlying Logic of the Polyester Chain Rally
The most notable aspect of this rally is not the magnitude of individual gains, but the redistribution of profits along the chain. Staple fiber rose 3.77% alongside PTA's 3.52% gain, indicating a cost-driven rather than demand-driven move. The 4.31% jump in bottle-grade chip reflects pre-season stockpiling for beverage packaging.
From an industry perspective, staple fiber producers have been operating near breakeven or at a loss for an extended period. This price recovery helps restore margins, but sustainability depends on downstream acceptance. Current loom utilization in Jiangsu and Zhejiang provinces remains around 70%, with no significant uptick, suggesting that end-demand has not yet materially improved.
Why Cotton and Cotton Yarn Lagged
Compared to the polyester chain's heat, cotton and cotton yarn saw tepid performance. Cotton futures inched up just 0.06% to 16,135 yuan, while cotton yarn rose 0.24% to 22,590 yuan. This contrast highlights the different positions of natural and chemical fibers in the current market.
Cotton faces a core contradiction of ample supply and weak demand. Global cotton production is expected to increase in the 2025/26 season, while Chinese port inventories remain high after import quota releases, with spot market transactions sluggish. Cotton yarn buyers, including fabric mills, are purchasing only on a need-to basis, with traders reluctant to build inventories. In contrast, staple fiber, as a substitute, gains a cost advantage when cotton prices are stable, attracting order shifts.
Transmission and Impact on the Textile Chain
The impact of rising staple fiber prices varies across the chain. For upstream PTA and PX producers, price increases directly improve processing margins, but the rally may prove unsustainable if end orders fail to materialize. For staple fiber processors, current price recovery alleviates cash flow pressures, but locking in profits depends on subsequent orders.
For downstream weaving mills, higher raw material costs mean increased cost pressure. If apparel brands resist price hikes, weaving mills face further margin compression. Currently, China's textile and apparel export growth is slowing, and domestic demand recovery is limited, making cost pass-through difficult in the near term.