Morgan Stanley has slashed its international oil price forecast for the second time in two weeks, capping Brent crude's spot average at $75 per barrel for both Q3 and Q4. The core logic behind this revision is that global oversupply is back in the driver's seat, while the energy crisis triggered by geopolitical tensions is rapidly easing. With the Strait of Hormuz reopened and stranded tankers sailing out, the 'ceiling' for crude is unlikely to see the extreme 50% surge witnessed just after the Spring Festival.
For the polyester chain, this means a key variable is being repriced. The cost pressure on polyester filament yarn has significantly eased, making a repeat of the March 'bull run' unlikely in the coming months. However, whether the upstream cost relief can pass downstream hinges entirely on demand-side willingness to absorb.
Downstream 'Promotion Fatigue' and Rational Play
On June 29, polyester mills launched a major promotion, but the market response was tepid, with the day's sales-to-production ratio hovering around 70%. The next day, it quickly dropped to about 30%. In previous sales events, even if they were 'one-day wonders,' ratios easily exceeded 100%. Now, even that brief euphoria is gone.
Downstream weaving mills have entered an ultra-rational decision-making phase: no orders, no machine startup. Profits over the past two years have been squeezed too thin, leaving companies with little buffer and poor production flexibility. Fabric price elasticity is equally fragile, with inventory and the break-even point for new greige goods still in play. Polyester mills are offering discounts, but weavers are barely even making small top-up purchases, let alone bulk stockpiling.
Polyester mills themselves are feeling inventory pressure. Stock days for POY, FDY, and DTY have reached 30, 35.7, and 41.8 days respectively, and are still rising. If downstream demand remains stubborn, mills will face a choice: continue a slow price decline or launch a more aggressive clearance sale.
Low Inventory and H2 Elasticity Window
Despite the prevailing pessimism, a structural opportunity is brewing beneath the surface. Because both upstream and downstream players have been cautious with stockpiling over the past two years, and H1 capacity utilization has been limited, actual physical inventory across the textile market is low compared to historical norms. If demand genuinely picks up, it could create a short-term supply-demand mismatch, restoring price elasticity for fabrics.
History shows that market rallies often need a catalyst. Last year, the 'New Chinese Style' fabric boom was a classic example. This summer, sun-protective clothing was seen as a potential hit, but frequent heavy rainfall in China delayed the heatwave, pushing back related demand. This doesn't mean the opportunity is lost—just that the window has shifted later.
The real trigger likely lies in H2. When the traditional 'Golden September and Silver October' peak season overlaps with low inventory levels, a demand surge in any niche segment could trigger a chain reaction. At that point, stable upstream raw material prices, a downstream inventory vacuum, and restored fabric price elasticity could combine to create a significant trading opportunity.