When oil prices fell more than ten dollars in four trading days, the pricing balance of the polyester chain tilted sharply. On August 5, MEG led losses with over 6%, bottle chips fell more than 4%, and other products dropped over 3%. This is not a routine cost-side correction but a concentrated unwinding of geopolitical risk premium, driven by optimism over US-Iran talks and the reopening of the Strait of Hormuz.
Event Background
The direct trigger was US Treasury Secretary Bessent's statement that the US and Iran might reach an agreement on the 4th or 5th to reopen the Strait of Hormuz for free commercial passage. Earlier, Trump's postponement of a large-scale strike on Iran had already eased tensions. For the polyester chain, crude oil is the cost anchor, and the Strait of Hormuz carries about one-third of global seaborne oil, so its passage outlook directly alters the oil price center.
A notable detail is that MEG began reducing positions on Friday night, with open interest dropping over 70,000 lots in four trading days. This means that above 5,000 yuan, longs demand extremely clear bullish catalysts—whenever geopolitical tensions show signs of easing, funds choose to exit and wait, triggering catch-up declines. Such positioning changes reveal market fragility more than price movements.
Industry Impact
Despite the cost collapse, the supply-demand landscape of the polyester chain tells a different story. The annual maintenance window for PX is underway, with multiple million-ton units at Shenghong Refining, Hainan Refining, and Zhejiang Petrochemical shutting down, affecting over 9 million tons of capacity and reducing monthly output by an estimated 800,000 to 900,000 tons. For PTA, the scale of units awaiting maintenance in June-July remains large, keeping capacity utilization low.
Inventory data confirm the tightening. As of early July, domestic PTA social inventories fell to 3.05 million tons, down 1.4 million tons from the April peak, with destocking lasting three months and absolute levels below the same period in the past two years. In other words, supply-side support exists, but the oil price shock temporarily overshadows fundamentals.
However, weak demand keeps bulls cautious. It is the traditional off-season for textiles, with widespread high temperatures and heavy rain suppressing end orders. Weaving operating rates in Jiangsu and Zhejiang remain at multi-year lows, and downstream factories generally adopt a 'buy-as-needed' strategy, lacking momentum for bulk restocking. End demand cannot absorb raw material price increases, squeezing polyester chain prices from both cost and demand sides.
For buyers and mills, this means significantly amplified short-term price volatility. Oil's financial nature makes its fluctuations lead fundamentals, and the polyester chain's lagged reaction adds complexity. If a US-Iran deal materializes, oil may fall further, but PX and PTA maintenance cuts provide some bottom support. Conversely, if negotiations falter, an oil rebound will quickly transmit to the polyester chain, causing sharp price spikes.
Practical Recommendations
For Buyers - Stay on the sidelines in the short term, avoid chasing rises or falls during volatile oil price swings, and consider phased purchasing to lock in lower-priced inventory. - Closely monitor US-Iran talks and Hormuz navigation; if a deal is reached, consider increasing purchases to reduce average costs. - Use futures instruments to hedge raw material price risks, especially with PTA basis strengthening expectations; buying hedges may be prudent.
For Mills - Maintain low inventory levels to avoid inventory devaluation from volatile raw material prices, while accelerating turnover to cope with uncertain end orders. - Optimize production scheduling to prioritize high value-added products, reducing reliance on bulk polyester chain commodities. - Track maintenance schedules and restart timelines, adjusting raw material procurement in advance to respond to potential supply tightening or loosening.
In summary, the polyester chain is in a window of game-playing between geopolitics and industry fundamentals. In the short term, oil dominates sentiment; in the mid-term, maintenance supports prices; and end demand determines the rebound height. Industry players should maintain discipline amid volatility, letting data and logic—not emotions—guide decisions.