When industry operating rates reach 70.36% but processing margins are squeezed into losses, the polyester staple fiber market is experiencing a typical supply-demand mismatch. On August 15, major domestic producers jointly launched production cut measures to reshape the price floor through proactive supply contraction. But whether these cuts can truly support prices and whether the 'Golden September' rally will materialize may depend not on the factory side, but on fabric transactions at Keqiao Textile City.
Supply-Demand Mismatch: Cost Push vs. Weak Demand
In July, Middle East geopolitical tensions pushed up international crude oil, driving polyester staple fiber prices higher, with East China spot prices touching 7,675 yuan/ton. However, in early August, as US-Iran tensions eased, geopolitical risk premiums quickly faded, weakening the raw material pull. Meanwhile, PTA unit restart expectations and weak demand formed a dual pressure, squeezing processing margins and expanding losses.
The root cause is supply-demand mismatch. July operating load reached 70.36%, with ample spot supply, while downstream yarn mills had high finished goods inventories, limited terminal order growth, and procurement remained just-in-time. Both domestic and export orders failed to show substantial recovery, and upstream raw material price increases could not transmit smoothly to fabric terminals, spreading market pessimism.
Production Cuts: Short-Term Support and Long-Term Game
On August 15, major producers jointly launched a self-rescue plan, including postponing new capacity, delaying restart of idle units, increasing load reduction, and coordinating to avoid low-price competition. Leading enterprises in Jiangsu, Zhejiang, and Fujian all participated, covering mainstream direct-spinning capacity. Cuts will intensify in late August, with September marking concentrated implementation and maintenance.
In the short term, if cuts are effective, operating rates could fall to around 67%, reducing monthly supply by about 30,000 tons, easing spot oversupply. Combined with low inventories for some branded sources, downside price risks are limited. But medium-term uncertainties remain: execution flexibility, potential load recovery on price rebound, deferred capacity not canceled, and demand as the core constraint. Without order improvement in September, supply-side cuts alone cannot sustain a rally.
Keqiao Signal: Litmus Test for Golden September Demand
Keqiao Textile City and surrounding Xiaoshao weaving clusters will directly feel supply-side changes. In August's traditional off-season, grey fabric transactions contracted, weavers and traders remained cautious, operating rates stayed low, and purchases were just-in-time, with small and scattered orders for PSF-related fabrics. While tighter raw material supply may raise trader costs and limit fabric price cuts, fabric price increases face resistance without order improvement.
Whether the September peak season materializes depends on actual increments in new and repeat orders at Keqiao, and whether weavers shift from just-in-time to proactive restocking. If market activity fails to recover, upstream production cuts' price support will be greatly diminished. Overall, from late August to early September, cuts should stabilize and strengthen the market, with processing margins gradually recovering. In mid-to-late September, the market will oscillate between weakening costs and demand recovery, maintaining an upward-trending consolidation.