Overall price trend last week: an initial surge followed by a rapid pullback, characterized by wide fluctuations.

Last week’s market performance unfolded in two phases: an initial surge followed by a rapid pullback driven by a collapse in costs. The core drivers were the easing of geopolitical tensions in the Middle East and a sharp decline in crude oil prices; these factors, combined with sluggish demand during the traditional off-season for textiles, resulted in quotes that remained nominally stable but effectively declined, alongside larger discounts on actual orders.

Phased Price Movements (Mainstream Specifications: POY 150D/48F, FDY 150D, DTY 150D)

1) Monday-Tuesday (June 12-13): Prices remained firm at high levels. Tensions in the Middle East supported crude oil prices, keeping PTA spot prices above 6,300 RMB/ton; manufacturers held firm on prices. Mainstream quotes were 8,550-8,600 RMB/ton for POY, 9,050-9,100 RMB/ton for FDY, and 9,700-9,750 RMB/ton for DTY. Residual momentum from earlier restocking remained, with some major plants maintaining a production-to-sales ratio above 100%.

2) Wednesday (June 15): Raw material prices plummeted, marking a turning point. Expectations of a US-Iran ceasefire materialized; PX prices plunged nearly $50 in a single day, and PTA futures dropped 406 RMB/ton, causing a rapid collapse in costs. Panic spread through the market; downstream buyers halted restocking and adopted a wait-and-see approach. Production-to-sales ratios plummeted to around 40%, and manufacturers actively lowered prices to move inventory, with POY prices dropping 100-150 RMB/ton in a single day.

3) Thursday-Friday (June 16-18): Prices continued to drift lower, and the focus of price negotiations shifted downward. As of June 18, mainstream spot transaction prices (actual orders in the Jiangsu-Zhejiang market) were:

• POY 150D: 8,250-8,350 RMB/ton (maximum weekly drop of approx. 300 RMB/ton)

• FDY 150D: 8,800-8,950 RMB/ton (weekly drop of approx. 220 RMB/ton)

• DTY 150D: 9,450-9,600 RMB/ton (smaller decline; high-elasticity specifications showed greater price resilience)

Comparison of last week's average prices with the previous week: POY rose slightly by 1.5% month-on-month, FDY by 1%, and DTY by only 0.5%. The declines in the latter half of the week completely erased the gains from the first ten days, resulting in a weekly pattern of "rising to a high before falling back" (a bearish close).

Analysis of Key Factors Influencing the Industry Chain

Cost Side: Crude oil weakened significantly, and the prices of both key feedstocks underwent a rapid correction (the primary bearish factor last week).

1. International Crude Oil: The geopolitical risk premium that had previously boosted prices dissipated rapidly; Brent crude retreated from above $84/bbl to the $78/bbl range. PX prices plummeted in tandem, significantly weakening the cost support for polyester feedstocks.

2. PTA: Spot prices fell from 6,350 RMB/ton at the start of the week to 5,860 RMB/ton by the weekend, a drop of nearly 500 RMB/ton over the week. Futures prices saw a slight recovery after consecutive sharp declines, but the overall price level shifted downward.

3. Ethylene Glycol (MEG): Prices weakened in tandem, with spot rates dropping from 4,760 yuan to 4,360 yuan. Processing margins were squeezed as prices fell by over 400 RMB/ton during the week, directly exerting downward pressure on filament quotes.

Supply Side: Leading producers continued to cut output; inventories saw periodic destocking (the sole supporting factor).

1. Industry Operating Rates: Major manufacturers such as Tongkun and Xinfengming are implementing voluntary production cuts. Last week, the overall operating rate for filament remained at 73%-74%—down 10 percentage points from the May peak—as supply contraction alleviated oversupply pressure.

2. Inventory Data: Factory inventories saw significant destocking last week; POY inventory stood at 19.6 days (down 35% week-on-week), with FDY at 25.2 days and DTY at 34.3 days. A wave of restocking in early June drove production-to-sales ratios to a peak (reaching as high as 1,000%), easing short-term inventory pressure, though levels remain above the historical average for the off-season.

3. Corporate Sentiment: Producers are reluctant to announce significant price cuts, though discounts are negotiable for large orders. Prioritizing inventory turnover has become the focus; fixed-price orders have declined, and negotiating terms on a case-by-case basis has become the norm.

Demand Side: Traditional off-season for textiles; demand was driven primarily by immediate needs, with no sustained recovery (long-term suppression).

1. Weaving Operations: Composite weaving operating rates in the Jiangsu-Zhejiang region stand at only 57%-67%, while texturing (DTY) rates are at 75%; although there has been a slight month-on-month rebound, overall levels remain low. It is the off-season for domestic apparel and home textiles; autumn/winter orders have yet to materialize in volume, and there is a scarcity of new orders.

2. Purchasing Behavior: Following the conclusion of passive restocking in early June, downstream buyers have reverted to a "buy-on-dips" mentality. Raw material inventories are maintained at only 7-11 days' worth of stock, with a refusal to stockpile for the long term. Inventories of greige and finished fabrics stand at 18.46 days, while order backlogs cover only 8 days, indicating poor demand transmission through the fabric sector.

3. Domestic and Foreign Trade: Domestic consumption remains sluggish. In foreign trade, high ocean freight costs and the shifting of orders elsewhere—with only a small volume of orders returning from Southeast Asia—have failed to drive overall demand.

Profitability: Rapid contraction of processing margins weakened industry earnings

Early in the week, filament producers maintained slim profit margins despite high raw material costs. However, as raw material prices plummeted in the latter half of the week—while finished product prices lagged in their decline—POY processing margins were squeezed to below 1,300 RMB/ton and DTY margins narrowed; consequently, small and medium-sized texturing plants fell back into the red, leading to a greater willingness to offer price concessions to move inventory.

Summary of Key Market Characteristics Last Week

1. Shift in Market Drivers: The market transitioned from being driven by geopolitical cost factors to being dominated by supply-demand dynamics typical of the off-season. Spikes in prices lacked demand support, indicating short-term speculative activity rather than a fundamental trend reversal.

2. Price Divergence: DTY prices saw smaller declines compared to POY and FDY, owing to higher processing barriers and greater value-added; POY exhibited the highest liquidity and the greatest price volatility.

3. Polarized Production and Sales: A surge in restocking during the first ten days of the month gave way to frozen trading activity in the latter part; a strong wait-and-see sentiment prevailed, and the willingness to chase rising prices completely evaporated.

4. Market Tug-of-War: Upstream production cuts provided a floor for prices, while weak off-season demand from downstream sectors capped the upside; the market has entered a period of oscillation driven by the competing forces of costs, supply, and demand.

Short-term Market Outlook (Next Week / Second Half of June)

1. Price Ranges (Mainstream Spot): POY: 8,200-8,500 RMB/ton; FDY: 8,750-9,000 RMB/ton; DTY: 9,400-9,650 RMB/ton. Prices are expected to fluctuate within these ranges, with little likelihood of significant, sustained rallies or sharp declines.

2. Key Bullish and Bearish Factors

Bearish: Crude oil and PTA prices remain weak; demand is unlikely to improve rapidly during the textile off-season; downstream buyers are limiting purchases to immediate needs and lack the incentive for active restocking.

Bullish: Major manufacturers are maintaining production cuts, and factory inventories are being depleted; raw material prices have fallen to low levels with limited room for further decline, providing a price floor.

3. Operational Recommendations

Weaving and texturing enterprises: Purchase strictly according to immediate needs; avoid large-scale stockpiling; consider small-batch restocking when raw material prices pull back. Polyester plants: Manage volumes through continued production cuts; avoid dumping stock at drastically reduced prices; focus on clearing inventory through actual orders with preferential pricing.

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