According to SunSirs commodity market analysis system, the domestic PTA market trended downward overall in June; as of June 29, the average spot market price in East China stood at 5,785 RMB/ton, down 8.36% from the beginning of the month.

In the first ten days of the month, geopolitical conflicts in the Middle East drove a crude oil risk premium; tight PX supply provided strong cost support, while earlier concentrated maintenance and low operating rates for PTA plants resulted in tight spot market liquidity, causing PTA prices to fluctuate at high levels. From mid-month onwards, however, geopolitical tensions between the US and Iran eased and shipping through the Strait of Hormuz resumed, leading to a rapid dissipation of the crude oil geopolitical premium and a sharp drop in oil prices that caused cost support to collapse. Concurrently, PTA plants resumed production following maintenance, operating rates rebounded, and supply eased; compounded by inventory accumulation in downstream polyester and sluggish weaving orders, PTA prices plummeted.

In the short term, there is no new PTA production capacity scheduled for the year; supply adjustments rely solely on operating rates, and there is no growth in long-term capacity. Although production resumed following a period of concentrated maintenance, overall operating rates have not returned to high levels, currently hovering around 64%. Furthermore, low port inventories and a strong spot basis limit the potential for a sharp price decline. As we enter July, capacity that underwent earlier maintenance is gradually restarting and operating rates are rising, shifting supply expectations from a state of periodic tightness to one of relative abundance.

On the cost side, upstream Asian PX facilities are undergoing extensive maintenance and inventories remain low; the price spread between PX and naphtha remains wide, providing a floor for costs. However, with the dissipation of the geopolitical premium on crude oil, prices have reverted to being driven by supply and demand fundamentals; volatility has increased, and there is a lack of strong momentum for upward movement.

Weak demand continues to weigh on prices. June and July mark the traditional off-season for the textile industry, and new orders for the autumn/winter season have yet to be placed in significant volume. Operating rates for looms in the Jiangsu-Zhejiang region remain sluggish, and inventories of finished polyester products continue to accumulate. Consequently, polyester plants are maintaining slight reductions in operating rates, and essential procurement of raw materials remains weak, resulting in insufficient upward momentum.

Overall, entering July, low PTA inventory and cost support from PX are preventing a sharp decline; however, the downstream sector is in its off-season with weak essential demand, and there is a lack of bullish drivers. Attention should be paid to fluctuations in international crude oil prices and the status of concentrated production cuts or restarts in the downstream polyester sector. PTA prices are expected to remain weak and fluctuate within a narrow range throughout July.

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