In July, polyester staple fiber prices surged to 7,675 yuan/ton in East China amid geopolitical tensions, but geopolitical premiums faded quickly in early August, pulling prices down. However, structural shortages in raw materials are redefining cost logic: PTA social inventories are set to hit a 44-month low, while ethylene glycol port inventories have fallen to a 15-year low, with spot premiums once reaching 540 yuan/ton. Low inventories and high basis provide substantial cost support for polyester staple fiber, but the sustainability of this support depends on the pace of plant restarts.
Cost Divergence and Hidden Risks
The raw material market currently shows a divergent but firm pattern. For PTA, the restart of two major units has been delayed, coupled with rainfall disrupting port loading in East China, tightening spot supply and pushing basis close to 300 yuan/ton. Ethylene glycol is affected by stalled Middle East situations and blocked strait navigation, leading to a sharp drop in imported arrivals, plus concentrated domestic maintenance, keeping operating rates low. The low inventory situation is unlikely to improve in the short term, providing bottom support for polyester staple fiber prices.
However, the concern is that in September, both PTA and MEG have scheduled restarts, bringing incremental supply. This means the strong cost support may weaken, and polyester staple fiber prices will rely more on self-supply-demand improvements. For buyers, the current high raw material prices are not demand-driven but supply-disruption-induced, so chasing highs requires caution.
Supply-Demand Mismatch: Root of Losses and Logic of Production Cuts
The deep losses in the polyester staple fiber industry stem from supply-demand mismatch. In July, industry operating load was as high as 70.36%, with ample spot supply, while downstream demand remained weak: yarn mills had high finished goods inventories, terminal orders saw limited growth, and both domestic and export markets showed no substantial recovery. Keqiao Textile City, a core fabric trading hub, saw gray fabric transactions shrink in August, weaving enterprises operated at low rates, and merchants bought on a need-only basis with little stockpiling. This terminal weakness directly limited the downward transmission of raw material price increases, squeezing processing spreads and widening industry losses.
On August 15, major producers jointly launched a self-rescue plan, with core measures including: postponing new capacity releases, delaying restart of parked units, increasing production cuts among existing enterprises, and collaboratively avoiding vicious low-price competition. This coordinated reduction is proactive, unlike passive shutdowns due to equipment failures. Leading enterprises in Jiangsu, Zhejiang, and Fujian all participated, covering mainstream direct-spun capacity, officially entering a production-cut-to-protect-profits cycle.
Evaluating Production Cut Effects: Short-term Support and Medium-term Uncertainty
In the short term, supply contraction will effectively ease the loose spot market. If self-discipline measures are implemented, industry operating rates could drop from 70.36% to around 67%, reducing monthly supply by about 30,000 tons, and with some brands holding low inventories, price bottom support is evident. For Keqiao Textile City and the surrounding Xiaoshao weaving cluster, tighter raw material supply will raise traders' procurement costs, limiting the space for fabric price cuts, and somewhat alleviating low-price competition, but without clear order improvements, fabric price increases face significant resistance.
However, the medium-term effects of production cuts are fraught with uncertainties. First, execution is elastic: once prices rebound and processing spreads recover, cash-strapped enterprises may reduce cut rates. Second, new capacity is only delayed, not canceled, and supply pressure will re-emerge after the industry returns to profitability. Most critically, demand is the core constraint on upward price movement. Whether the September peak season materializes depends on actual increments in new and repeat orders at Keqiao Textile City, and whether weaving mills shift from just-in-time purchasing to active stockpiling. If terminal transactions do not effectively recover, the boost from upstream production cuts will be greatly diminished.
Price Rhythm Forecast and Operational Suggestions
Based on comprehensive industry chain information, this coordinated production cut will clearly underpin polyester staple fiber prices. From late August to early September, with cuts taking effect and high raw material basis, processing spreads have room to recover, and prices will stabilize and strengthen; in mid-to-late September, the market will oscillate between cost weakening and demand recovery, likely maintaining a volatile upward trend. The biggest risk lies in supply rebound after profit recovery: price recovery may trigger relaxation of cuts and new capacity release, suppressing processing spread recovery.