The polyester staple fiber (PSF) industry is balancing on a knife's edge: upstream raw materials remain firm due to low inventories, while downstream demand stays weak, squeezing processing margins into losses. On August 15, major domestic producers jointly launched production cuts to support prices. But whether this self-rescue can deliver a "Golden September" depends not on supply, but on the fabric merchants in Keqiao who buy hand-to-mouth.
Cost Support: Short-Term Backing from Low Inventories and High Basis
In July, PSF prices surged on Middle East tensions, with East China spot touching 7,675 yuan/ton, but retreated as geopolitical premiums faded. In mid-August, raw materials strengthened again: PTA basis approached 300 yuan/ton due to delayed restarts of two major units and rain disrupting port loading, with social inventories expected to hit a 44-month low. MEG port inventories in East China fell to a 15-year low, with spot premiums reaching 540 yuan/ton in early August, driven by blocked shipping lanes and concentrated maintenance. Low inventories provide solid short-term cost support, but it is fragile—once PTA and MEG units restart, supply increments will erode cost backing, likely by September.
Supply-Demand Mismatch: Root of Losses and Logic of Cuts
PSF's dilemma stems from supply-demand imbalance. July operating rates hit 70.36%, with ample spot supply, while downstream yarn mills faced high finished goods inventories and limited orders, purchasing only on a hand-to-mouth basis. Keqiao's fabric market saw reduced gray fabric transactions in August, with weaving mills running at low rates and merchants avoiding stockpiling. The inability to pass on raw material price increases squeezed processing margins, widening losses. This forced major producers to announce a self-regulatory plan on August 15: postponing new capacity, delaying restart of idle units, and actively reducing operating rates. If implemented, industry operating rates could fall to 67%, cutting monthly supply by about 30,000 tons, providing a floor for spot prices but not curing demand weakness.
Production Cuts: Short-Term Support vs Mid-Term Uncertainty
In the short term, production cuts clearly underpin prices. Leading enterprises in Jiangsu, Zhejiang, and Fujian all participate, covering mainstream direct-spun capacity. Cuts will intensify in late August, with September entering a concentrated maintenance period. Tighter spot supply will raise traders' costs, limiting fabric price declines and easing low-price competition. However, mid-term risks loom: cut execution is flexible—once processing margins recover, cash-strapped firms may resume output. New capacity is postponed, not canceled, and supply pressure will return after losses turn to profits. More critically, demand is the core constraint—without real improvement in September orders, supply cuts alone cannot sustain a rally.
Golden September Outlook: Oscillating Uptrend, Limited Upside
From late August to early September, production cuts and high cost basis should repair processing margins, stabilizing and strengthening PSF prices. In mid-to-late September, PTA and MEG restarts will weaken cost support, leading to a tug-of-war between weaker costs and demand recovery, with prices likely oscillating upward. Keqiao fabric market is the key window to verify demand realization—monitor gray fabric transactions, weaving operating rates, and export orders. If autumn/winter fabric orders release, weaving restocking could transmit upward, but currently the market is still in expectation, with no clear signs of recovery.