On July 17, the average production-sales ratio of sample polyester filament yarn enterprises dropped to 33.0%, down 0.1 percentage point from the previous trading day. This figure is not just a snapshot of sluggish market trading but a signal that the chemical fiber industry has entered a new phase of structural demand weakness. When the production-sales ratio persistently hovers between 30% and 40%, the industry has shifted from cyclical fluctuations to structural contraction.
Data Signals Behind the Production-Sales Ratio
According to public data from sample enterprises, the production-sales ratio on that day was highly dispersed: the lowest was 0%, the highest was 60%, and most companies fell in the 15% to 35% range. This "low on both ends, scattered in the middle" pattern indicates that downstream weaving and apparel companies are generally reluctant to purchase, which is not a problem of individual enterprises.
As a core category of textile chemical fibers, the production-sales ratio of polyester filament yarn is a key leading indicator of supply chain health. A 33% ratio means more than two-thirds of capacity has not been absorbed by the market, and inventory pressure is being transmitted upstream to polyester chips and PTA. For chemical fiber companies that produce based on sales, a sustained low ratio will force production cuts or price reductions. However, demand lacks elasticity, and price cuts may not effectively stimulate purchases.
Root Causes of Weak Demand
The current demand weakness is not driven by a single factor. From the end-market perspective, foreign trade orders for apparel experienced a brief recovery in the first half of 2024 but have slowed significantly in the third quarter. Destocking cycles in European and American markets have not ended, and brands remain cautious about replenishment. Domestic consumption is also under pressure, with growth in apparel retail sales slowing and consumer confidence at low levels.
From the supply chain perspective, the operating rate of weaving mills has fallen from a high in the second quarter to below 70%, and gray fabric inventories are piling up. This has led to procurement of polyester filament yarn being limited to urgent needs, with speculative buying nearly absent. This "buy on rising prices, avoid on falling" mentality has intensified during periods of stable or slightly declining prices, creating a vicious cycle.
Notably, raw material costs for chemical fibers have not eased significantly. Prices of PTA and MEG remain relatively high due to international oil prices and PX supply. This means chemical fiber companies face a triple squeeze of "high costs, low selling prices, and poor sales," with profit margins being compressed to the limit.
Transmission and Responses Across the Supply Chain
Upstream polyester plants have begun to adjust supply through maintenance and production cuts. Several large plants scheduled maintenance shutdowns in mid-July, attempting to stabilize prices by reducing supply. However, the effects of production cuts need time to materialize. If demand continues to be weak, production cuts may only delay price declines rather than reverse the trend.
Downstream weaving and dyeing companies remain on the sidelines. Due to insufficient orders, they prefer to reduce raw material inventory cycles from the previous 15-20 days to 7-10 days. This "buy as you use" strategy further exacerbates sales difficulties for polyester filament yarn manufacturers.
Regionally, traders in traditional chemical fiber clusters such as Xiaoshao, Shengze, and Changxing report a significant decline in inquiries, with actual transactions limited to small, sporadic orders and large orders rare. Market sentiment has shifted from cautious optimism in the second quarter to widespread pessimism in the third quarter.
Practical Recommendations
For Buyers - In the current low production-sales environment, raw material prices still have room to decline. It is advisable to purchase on demand and avoid large-scale stockpiling. Monitor upstream production cuts; if cuts intensify, prices may see a temporary rebound in late August or September, presenting an opportunity to increase purchase volumes. - Prioritize suppliers with ample cash flow and stable production equipment to avoid supply disruptions due to financial difficulties at smaller plants. Leverage the current buyer's market to negotiate more flexible payment terms.
For Foreign Trade Companies - Export order quotes must fully account for raw material price volatility. Consider including price adjustment clauses in contracts or locking in forward exchange rates. Given the current volatility in the renminbi exchange rate and raw material prices, avoid long-term fixed-price contracts. - Monitor demand changes in Southeast Asian markets. If European and American orders continue to weaken, explore emerging markets such as the Middle East and Africa, which still have stable demand for mid-to-low-end polyester filament yarn products. - Use the industry downturn to optimize product structure by shifting toward differentiated and functional fibers. High-value-added products offer stronger bargaining power and help avoid price wars on commoditized products.
This deep adjustment in the chemical fiber industry is both a challenge and an opportunity for consolidation. When the tide recedes, only those companies that truly invest in cost control, product innovation, and customer relationships will gain an edge in the next cycle.