International oil prices plunged more than $10 a week, dragging the polyester chain down sharply. MEG led losses with over 6%, bottle chips fell over 4%, and other products dropped more than 3%. As geopolitical premiums fade rapidly, the market is re-evaluating supply-demand fundamentals. For polyester enterprises, cost-side volatility is only a surface issue; the real drivers are maintenance execution rates and whether terminal demand can form a resonance.
Geopolitical Easing Triggers Cost Collapse
Optimism over US-Iran talks and hopes for reopening the Strait of Hormuz shifted sentiment in the crude market. The US Treasury Secretary said a deal could be reached, allowing free passage for commercial ships. Earlier, Trump's delay of a large-scale attack on Iran left room for diplomacy. Geopolitical risk premiums evaporated quickly, undermining cost support for the polyester chain.
MEG started reducing positions on Friday night, with open interest dropping over 70,000 lots in four sessions. Above 5,000 yuan, longs lacked confidence and exited on any marginal negative news, causing a catch-down. This reflects high sensitivity to geopolitical headlines and suggests pricing power is shifting from geopolitics to supply-demand realities.
For buyers, the immediate impact is lower raw material costs, but they should be wary of oversold rebounds. If talks fail, oil prices could recover quickly, causing polyester chain prices to fluctuate. Therefore, chasing lows is not advisable; focus on cost stabilization signals.
The Game Between Maintenance and Destocking
Amid cost collapse, supply-side maintenance news emerged. PX plants are in annual turnaround windows, with several million-ton units at Shenghong, Hainan, and Zhejiang Petrochemical shutting down, affecting over 9 million tons of capacity and reducing monthly output by 800,000-900,000 tons. PTA maintenance in June-July remains extensive, keeping capacity utilization low.
As of early July, PTA social inventory stood at 3.05 million tons, down 1.4 million tons from April's peak, extending a three-month destocking cycle and below the same period in the past two years. Theoretically, supply contraction should support prices, but weak off-season demand offsets this. Weaving operating rates in Jiangsu and Zhejiang remain at multi-year lows, with downstream mills adopting a hand-to-mouth purchasing strategy.
This suggests destocking is driven by active supply cuts, not demand recovery. If processing fees recover to high levels, maintenance execution may decline, and early restarts could reverse the destocking logic. Watch two things: actual maintenance performance and restart progress. If both disappoint, PTA spot prices may face pressure.
Transmission Effects in the Off-Season
Nationwide high temperatures and heavy rain further suppress weaving operations. Poor terminal orders prevent polyester chain prices from passing through, and raw material price increases lack support. The chain features upstream maintenance destocking, midstream cost collapse, and downstream weak demand, creating confusing price signals and complicating corporate decisions.
For factories, cash flow management is crucial during the off-season to avoid inventory losses from raw material volatility. Foreign trade firms should monitor exchange rates and freight costs; geopolitical easing may lower shipping costs, but order recovery still needs time. The industry expects seasonal demand improvement in late Q3, but the magnitude depends on macro conditions and consumption recovery.