On July 27, a set of data cut a gash across the chemical fiber market: the average sales-to-production ratio of polyester filament sample enterprises was merely 25.4%, a staggering drop of 20 percentage points from the previous day. This is not a one-day fluctuation; it is a demand freeze triggered by a cost collapse.
Cost Side: The Butterfly Effect of Polymerization Cost Collapse
The easing of geopolitical tensions was the first domino in this transmission chain. Weaker international crude oil expectations directly lowered polymerization costs, which serve as the pricing anchor for polyester filament. This collapse quickly cascaded downstream. Industry data showed sluggish inquiries and few reported transactions, with some sample points even recording zero percent sales. This means some companies had zero orders for the entire day. Although factory operating rates were not immediately adjusted, inventory pressure was quietly accumulating.
Historically, a single-day collapse in polymerization costs often triggers a wait-and-see attitude among downstream buyers, driven by a 'buy on rising, not on falling' mentality. The sharp drop in the sales-to-production ratio essentially reflects a collective pause in replenishment by downstream weaving mills, waiting for the price floor to be confirmed. This 'wait and see' mentality was fully reflected in the day's data: the distribution of sales-to-production ratios was heavily right-skewed, with most companies falling in the 20%-30% range, far below the industry safety line of 60%.
Demand Side: Caution and Inventory Games in the Weaving Sector
Behind the plunge in the sales-to-production ratio lies the dual pressure of weak end-demand and destocking in intermediate links. Currently in the traditional off-season for textiles, loom operating rates in the Jiangsu-Zhejiang region are already at annual lows. Moreover, some weaving mills had accumulated certain raw material inventories when polyester filament prices were relatively firm. With the cost collapse, these mills prefer to consume existing stocks rather than make new purchases, further worsening the sales data.
Notably, some sample enterprises still recorded relatively high ratios of 40%, indicating the market is not uniformly affected. Differentiated and high-value-added products show significantly better resilience than commodity grades. However, the 25.4% average signifies a collective demand shock across the industry. For small and medium-sized chemical fiber enterprises, if the single-day sales-to-production ratio remains below 30% for more than a week, cash flow pressure will escalate rapidly.
Inventory Side: Passive Accumulation Risk on the Horizon
The other side of the sales-to-production ratio is inventory. A 25.4% ratio means over 70% of the day's output will be converted into inventory. The polyester filament industry was already in a destocking cycle, with leading companies steadily reducing inventory through scale advantages and pricing power. However, this cost collapse could interrupt that process. If the sales-to-production ratio fails to recover above 50% in the coming week, the industry will face the risk of passive inventory accumulation, potentially reigniting price wars.
From a regional perspective, major polyester filament production hubs like Shengze, Changxing, and Xiaoshan will bear the brunt of inventory pressure. Small and medium-sized enterprises in these areas, lacking hedging tools, face a test of operational resilience against bidirectional price and cost fluctuations. In contrast, leading companies, with their integrated industrial chain advantages, can offset losses in polyester filament with profits from upstream PTA and MEG, further widening the industry divide.