The intensity of geopolitical conflicts is directly rewriting the cost structure of the chemical fiber industry chain. Over the past week, international oil prices climbed continuously amidst escalating tensions in the Middle East, with the Houthi group announcing a maritime blockade against Saudi Arabia and ongoing US airstrikes on Iran. These events quickly transmitted to the domestic polyester sector, prompting a cost-driven price revaluation in the polyester filament market.
Dual Drivers: Cost and Supply
The Jiangsu and Zhejiang region, as the core production base for domestic polyester filament yarn, serves as a key price barometer. According to publicly available industry data, during the week of July 17-23, the average weekly price for POY 150D/48F reached 8,350 RMB/ton, up 3.41% week-on-week; FDY 150D/48F averaged 8,550 RMB/ton, up 2.83%; and DTY 150D/48F averaged 9,330 RMB/ton, up 2.19%. POY prices fluctuated within a range of 8,150 to 8,500 RMB/ton, showing a persistent upward trend within the week.
It is noteworthy that this rally is not merely a cost pass-through. On the supply side, domestic melt-direct spinning polyester filament yarn weekly output remained stable at 645,300 tons, with capacity utilization holding at 74.39%, both unchanged from the prior week. This indicates no significant aggregate supply contraction, but a structural shortage is emerging. Due to earlier production cuts by leading enterprises, spot supply for certain popular specifications has tightened, enabling factories to raise quotes continuously and steadily push the market center higher.
Downstream Weaving: Slight Capacity Dip, Restocking Intent Revives
Terminal demand presents a mixed picture. Domestic weaving capacity utilization stood at 51.68% this week, down 0.63 percentage points from the previous week. This suggests no explosive growth in end-user orders, with weaving companies generally operating cautiously. However, the average sales-to-production ratio for polyester filament factories was 56%, down 6 percentage points from the prior week. Given the rising price trend, this ratio actually reflects active restocking intentions from downstream texturing and weaving mills.
The underlying logic is that cost escalation expectations have triggered a 'buy on rising prices' mentality. Fearing further raw material cost increases amid sustained oil price hikes, texturing and weaving mills opted to increase procurement moderately during the week to lock in costs. This directly alleviated inventory pressure at polyester filament factories and provided the confidence for continued price hikes.
Profit Recovery and Market Outlook
The combined effect of cost push and improved sales is most evident in profit margins. During this period, profit for POY products reached 366.31 RMB/ton, a sharp increase of 118.41 RMB/ton or 47.77% week-on-week. This rapid profit recovery offers a significant breather for polyester factories that have been under pressure, but it also implies accumulating cost pressure downstream in the chain.
Looking ahead to next week, the market is likely to maintain a narrowly firm trajectory. The core logic is threefold: first, geopolitical tensions are unlikely to ease significantly in the short term, keeping crude oil prices prone to gains and providing solid cost support; second, polyester filament factory inventories are low, with some popular specifications in tight supply, giving factories the leverage to support prices; third, although downstream operating rates are slightly down, restocking demand persists, and sales are expected to remain relatively healthy.