SunSirs: With Double Bearish Factors of Rising Costs and Weakening Demand, Polyester Staple Fiber Prices Lowered in May

According to SunSirs' commodity market analysis system, the market focus for polyester staple fiber shifted downward in May. As of May 29, the average domestic market price for polyester staple fiber (1.4D*38mm) stood at 7,831 RMB/ton, representing a decline of 6.13% compared to the beginning of the month. Although operating rates within the sector remained low, the support this provided was limited; meanwhile, a "rollercoaster" ride in crude oil prices dominated market sentiment, and this—compounded by a lack of orders during the traditional off-season for the downstream textile industry—created bearish pressure on the polyester staple fiber market.

Throughout May, international crude oil prices generally trended downward. This shift was primarily driven by a rapid transition in market sentiment—moving away from the "geopolitical conflict premium" that had previously prevailed—toward expectations of diplomatic de-escalation, compounded by bearish fundamental factors. Under the combined weight of four key elements—signals regarding the resumption of U.S.-Iran talks, the partial restoration of shipping traffic through the Strait of Hormuz, the IEA's downward revision of supply and demand forecasts, and a massive surge in API crude oil inventories—the risk premium built into oil prices during the preceding period dissipated en masse, resulting in a distinct downward trend in the crude oil market. Furthermore, dampened by weak global demand and concerns that escalating geopolitical conflicts could drag down economic growth and oil consumption, the crude oil market experienced a significant decline. Reflecting this downturn in crude oil prices, domestic market prices for gasoline and diesel—particularly those from independent refineries—remained at low levels. As of May 28, the settlement price for the July contract of U.S. WTI crude oil futures stood at $88.90 per barrel, while the settlement price for the Brent crude oil futures contract was $93.71 per barrel.

As of the end of May, the spot price of PTA in China's East China region stood at 6,258 RMB/ton, marking a decline of 8.87% compared to the beginning of the month. While increased maintenance shutdowns among producers have kept operating rates at a low level, the resulting price support remains limited. The market was dominated by the "rollercoaster" volatility of crude oil prices, while the textile industry's off-season—characterized by a scarcity of orders—exerted downward pressure on prices. On the supply side, major PTA manufacturers had already carried out maintenance on some of their production units during April and May; consequently, the current operating rate for the PTA industry stands at less than 60%.

On the demand side, operating conditions for downstream polyester yarn enterprises have become increasingly challenging, with the average operating rate for the pure polyester yarn sector standing at 69.81%. Overall, end-market orders remain weak; moreover, the substitution effect—driven by high prices—is becoming apparent, leading end-users to prioritize the depletion of existing raw material inventories rather than actively pursuing new purchases. Consequently, the weaving industry is striving to minimize machine run-times in an effort to curb the rate at which inventory levels are rising. Meanwhile, the anticipated upside from potential tariff-related developments is unlikely to materialize in the short term; given the persistently high ocean freight rates and the resulting elevated export costs, the downstream weaving sector’s capacity to absorb new orders remains insufficient.

Analysts at SunSirs believe that the crude oil market is currently focused on negotiations regarding geopolitical tensions in the Middle East. If the conflict in the Middle East persists over the long term, it would not only drive a sustained rise in oil prices but also exacerbate global inflationary pressures, thereby dragging down global economic growth; in the short term, crude oil prices are expected to experience significant volatility. Regarding PTA, two production units are expected to restart next week, which will consequently weaken cost-side support. On the supply and demand front, operating rates for polyester staple fiber (PSF) are currently at a year-to-date low; however, new production units are still expected to come online in the coming months, and demand is gradually entering its traditional off-season. As the supply-demand imbalance within the industry remains unresolved and bearish factors predominate in the market, PSF prices are projected to exhibit a weak trend in the short term.

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