Last week, the polyester chain experienced a rapid evaporation of premium. After Trump ordered a halt to airstrikes on Iran, international oil prices opened sharply lower, with PX and PTA futures quickly falling about 6%, followed by bottle-grade chips and staple fiber dropping around 4%. This sell-off was not an isolated event but the result of a confluence of geopolitical sentiment receding and off-season industrial pressures.
Geopolitical Cooling: The Catalyst for Premium Retreat
The US-Iran conflict had escalated since mid-June, with 13 consecutive days of daily airstrikes pushing crude oil risk premiums to highs. However, last weekend, Trump voluntarily suspended military strikes, with the US envoy publicly stating this was to leave room for diplomatic negotiations. Iran also paused retaliatory strikes. This signal directly caused oil prices to gap down, instantly weakening the cost support for the polyester chain. From an industrial perspective, geopolitical premiums are a double-edged sword. They can push raw material prices higher in the short term, but once sentiment reverses, the retreat is often faster than the accumulation. The single-day drop of over 6% in PX and PTA essentially erased the risk premium accumulated over the previous two weeks. For the polyester chain, this means short-term cost disruptions have largely been digested, and market attention will shift back to supply-demand fundamentals.
Supply-Demand Imbalance: Real Pressure in the Off-Season
The core contradiction facing the polyester chain is not cost but demand. July is the traditional off-season for the textile industry, with widespread high temperatures and rainy weather further suppressing terminal orders. Weaving operating rates in the Jiangsu-Zhejiang region remain at multi-year lows for this period, and downstream mills generally maintain a 'buy-as-needed' cautious strategy, lacking the impetus for large-scale concentrated restocking. This weak demand directly limits the upside potential for prices. When raw material prices rise, the terminal cannot effectively absorb them, putting pressure on polyester chain product prices. In other words, even if the cost side provides bottom-line support, prices cannot sustain strength without demand-side cooperation. The geopolitical cooling merely ignited the fuse for price declines; the real anchor is the supply-demand imbalance during the off-season.
Supply-Side Maintenance: The Game Between Destocking and Production Cuts
Despite weak demand, the supply side is not without highlights. PX units are in the annual maintenance window, with multiple million-tonne units at Shenghong Refining, Hainan Refining, and Zhejiang Petrochemical shutting down, involving over 9 million tonnes of capacity and monthly production losses of about 800,000-900,000 tonnes. PX industry operating rates have thus fallen to 59.4%, with the overall Asian operating rate also dropping to 56.6%, a yearly low. On the PTA side, the industry launched an unprecedented wave of concentrated maintenance since April, with total capacity involved in shutdowns or load reductions once exceeding 22 million tonnes, accounting for over 20% of domestic capacity. PTA daily capacity utilization once fell to about 60%, the lowest since October 2021. The scale of units scheduled for maintenance in June-July remains large, and utilization rates are expected to stay low. The combined effect of supply and demand has led to notable PTA inventory destocking. As of early July, domestic PTA social inventory stood at 3.05 million tonnes, down 1.4 million tonnes from the April peak, marking a three-month destocking cycle. Absolute inventory levels are below those of the same period in the past two years. However, caution is warranted: if processing margins recover to high levels, the actual fulfillment rate of PTA maintenance may decline, and the restart progress of idled units will become a key variable for the market.
Market Outlook: Wide Fluctuations Remain the Theme
With the US and Iran suspending mutual strikes, the market expects a potential new ceasefire agreement, making it difficult for crude oil premiums to further retreat in the near term. The marginal effect of industrial destocking is narrowing, meaning polyester chain prices will likely continue to fluctuate widely in line with costs. Spot PTA prices in East China are expected to trade in the 5,710-5,860 yuan/tonne range this week. For downstream textile mills, the current price window presents both risks and opportunities—moderate stockpiling at low raw material prices could provide cost advantages for subsequent order recovery.