The Polyester Chain's Triangular Stalemate: Who Will Blink First?

International crude oil prices have fallen sharply after the US-Iran peace agreement, with shipping in the Strait of Hormuz gradually resuming and oil prices back to pre-conflict levels. But this cost collapse hasn't brought universal joy to the polyester chain—upstream raw material producers, midstream filament firms, and downstream weaving factories are locked in a rare triangular standoff.

A Broken Cost Transmission

The oil price drop should have cascaded down the chain from crude oil to PX to PTA to polyester filament to grey fabric. But the filament link has become a blockage point. Industry data shows filament processing margins are at multi-year highs, yet filament producers have chosen to cut operating rates to around 70% rather than cut prices and boost volumes.

Downstream weavers are in the most passive position. Before the oil price decline, they had long suffered from 'flour being more expensive than bread'—high filament prices with no room to raise fabric prices, making every order a loss. With raw material costs now collapsing, weavers naturally expect filament prices to 'catch down' to reasonable levels; otherwise, taking orders means losing money.

Upstream raw material producers are equally anxious. July saw major planned maintenance cuts for PX and PTA, further lowering operating rates. But looking ahead to August and beyond, as Strait shipping recovers and refinery maintenance ends, raw material supply may gradually loosen. The upstream's core demand is for filament plants to raise operating rates—only with higher filament output and sales can PTA demand recover, enabling upstream inventory destocking.

Output Cuts: The Midstream's 'Profit Wall'

Filament producers' logic for cutting output to protect margins is clear. In past years, every time raw materials dropped, they cut prices to boost sales, only to see processing margins squeezed to nothing, becoming mere 'porters' for upstream suppliers. Now they seem determined to defend their profit floor—operating at full capacity to earn 100 yuan per ton is less attractive than running at 70% to earn 500 yuan per ton.

This hardline stance has created a self-reinforcing stalemate: filament producers won't cut prices significantly, so downstream buyers refuse to restock, keeping sales volumes low; low sales prevent inventory destocking, making it impossible to raise operating rates; without higher filament rates, PTA can't sell, thwarting upstream destocking plans. Currently, no party is willing to make the first move.

Implications for Buyers and Exporters

This standoff means longer wait-and-see periods and higher decision-making difficulty for downstream buyers and foreign trade firms. If the deadlock persists, grey fabric prices may stay weak, but with insufficient cost support from filament, final order pricing still faces raw material uncertainty.

For Buyers - Avoid rushing to build large inventories; consider small, staggered purchases to wait for more favorable filament price adjustments. - Monitor filament plant operating rates closely—a rise above 80% could signal impending price softening. - Negotiate short-term floating price contracts that lock in processing fees rather than absolute raw material prices to hedge against volatility.

For Exporters - Use transparent pricing formulas based on 'raw material cost plus processing fee' for export orders to avoid losses from raw material swings. - Keep an eye on Middle East geopolitical developments—full restoration of Strait shipping could further depress PX and PTA supply, pulling down filament costs. - Consider shortening order lead times to confine raw material price risk within a narrower window.