When industry operating rates reach 70.36% and spot supply is ample while terminal orders remain weak, squeezed processing margins become almost inevitable. In July, polyester staple fiber prices were driven up by geopolitical disruptions, with East China spot prices touching 7675 yuan per ton. But by August, the geopolitical premium faded rapidly, weakening the pull from raw materials and pushing the industry back into losses. On August 15, major producers jointly announced production cuts to repair processing margins through proactive supply contraction.
Supply-Side Contraction
These cuts are not passive shutdowns due to equipment failures but proactive adjustments driven by profit concerns. Leading enterprises in core production areas such as Jiangsu, Zhejiang, and Fujian are all participating, covering mainstream direct-spinning capacity. Plans call for intensified load reductions in late August, with concentrated cuts and maintenance in September. If fully implemented, the industry operating rate could fall from 70.36% to around 67%, reducing monthly supply by approximately 30,000 tons, thereby easing the loose spot market.
However, the enforcement of these cuts is flexible. Once prices rebound and processing spreads improve, some cash-strapped enterprises may relax their cut commitments and resume production. Meanwhile, new capacity is only deferred, not cancelled, so supply pressure will return once the industry turns profitable. Therefore, the sustainability of short-term supply support depends on the rigidity of corporate self-discipline.
Divergent Cost Support
The raw material market currently shows a divergent but firm pattern, providing phased cost support for polyester staple fiber. For PTA, delayed restarts of two core units and port disruptions due to rainfall in East China have tightened spot supply, with basis approaching 300 yuan per ton and August social inventories possibly falling to a 44-month low. MEG is also firm, with reduced imports due to Middle East tensions and blocked straits, coupled with concentrated domestic maintenance, pushing East China port inventories to a 15-year low and spot premiums up to 540 yuan per ton in early August.
But the sustainability of this cost support is questionable. Later, PTA and MEG units are scheduled to restart, increasing raw material supply and accumulating risks of weaker costs. This implies that processing margin recovery for polyester staple fiber may rely more on self-imposed cuts than on raw material price pass-through.
Demand-Side Constraints
Weak downstream demand is the fundamental cause of industry losses. Terminal textile and apparel orders show limited growth, yarn mills hold high finished goods inventories, and raw material purchases follow a rigid restocking pattern with low willingness to build stocks. At Keqiao Light Textile City, a key fabric trading hub, August gray fabric transactions contracted overall. Weaving and trading merchants remained cautious, operating rates were low, and polyester staple fiber-related fabrics moved mainly in small and scattered orders, with only a few foreign trade orders following up. Upstream price increases are hard to pass through downstream, making fabric price hikes difficult.
This supply-demand mismatch means that relying solely on supply contraction cannot drive sustained price strength. Whether the traditional September peak season materializes depends on actual increments in new and repeat orders, as well as whether weavers shift from rigid restocking to active stockpiling. Keqiao market activity serves as a key window to observe demand realization.
Price Trend Forecast
Based on industry chain information, this round of coordinated cuts provides clear price support. From late August to early September, as cuts take effect and raw material basis remains high, processing margins have room to recover, and prices are likely to stabilize and strengthen. In mid-to-late September, the market will fluctuate between weaker costs and demand recovery, likely maintaining an upward but volatile trend. However, once prices recover, the risk of supply rebound emerges, making a sustained unilateral rally unlikely; repeated fluctuations may become the norm.