In December, weak costs and weak demand dominated the market, leading to a continuous slide in polyester market prices, which fell below the annual low. However, towards the latter part of the month, a strong surge in PX, a key upstream raw material for polyester, drove up the market prices of PTA, the primary polyester feedstock. This created robust cost support, forcing polyester market prices to follow the upward trend passively. The clash of strong costs against weak demand has increased the difficulty of passing costs downstream, resulting in a contraction in the industry's profit margins.
Influenced by both changing cost drivers and weakening terminal demand, polyester market prices in December first continued to fall, hitting bottom, then rebounded. Due to expectations of an oil surplus and the simultaneous impact of new production capacity coming online, the market prices for polyester feedstocks PTA and MEG trended weakly. Weak cost support, coupled with a seasonal slowdown in downstream demand, led to declines across polyester product prices. Notably, affected by the concentrated release of new polyester production capacity, the market prices for polyester chips and polyester filament yarn successively breached their yearly lows, reaching 5,450 yuan/ton on December 16 and 6,225 yuan/ton on December 19, respectively. However, towards the end of the month, an early start to PX demand for gasoline blending strengthened expectations of a tight supply-demand balance, causing its market price to rise sharply. Rising costs, combined with expectations of "low operating rates and low inventory" in the PTA market, created a联动上涨态势 between PX and PTA. With cost support strengthening significantly, the polyester market entered a phase of passive price increases. As of December 26, the monthly average prices for polyester staple fiber and PET bottle chips had registered slight increases of 0.50% and 0.99%, respectively.
Weakening terminal demand has exacerbated the supply-demand imbalance in the polyester sector, concentrating profits upstream in the industrial chain. The comprehensive operating rate in the weaving industry currently sits around only 61.5%, down 4.81 percentage points year-on-year, while finished product inventories have accumulated to 33.8 days, an increase of 0.8 days compared to the previous year. Weaving enterprises are currently primarily receiving small-batch, urgent orders, and expectations for early holiday closures are strong, indicating a significant seasonal downturn in demand. Conversely, the average monthly operating rate for polyester production remains high, above 88%, creating a clear mismatch between supply and demand. The release of new production capacity intensifies supply pressure, while terminal demand is unable to absorb this round of cost increases. From the perspective of profit distribution along the polyester chain, upstream PX benefits from demand support for gasoline blending; its tight supply-demand situation has led to profit expansion, with average monthly gross profit surging 350.72% month-on-month. Midstream PTA actively followed the rise in raw material costs, but under supply pressure, its gross profit only increased by 0.3% month-on-month. Midstream MEG and downstream polyester products fell into loss-making territory. Among these, only PET bottle chips, which have seen sustained voluntary production cuts throughout the year, and polyester staple fiber, which has had no new capacity additions this year, showed relatively strong price support. They were slower to follow raw material price declines but quicker to follow increases, leading to a month-on-month recovery in their gross margins. Overall, from the terminal weaving segment to the midstream MEG segment, profit margins are being continuously squeezed, highlighting a clear trend of profits concentrating towards the upstream raw material end.
Throughout December, prices across the polyester chain experienced wide fluctuations. The already thin profitability of polyester plants turned negative across the board by month-end, as industry profits were effectively siphoned off by upstream PX. Faced with persistently rising upstream market prices, polyester product prices were forced up passively. However, the polyester terminal market is in its traditional off-season and cannot digest the significantly increased costs, leading to an ineffective pass-through of costs. Some polyester enterprises have begun arranging Spring Festival maintenance plans early to avoid the risk of potential devaluation of high-priced inventories. Nevertheless, leading polyester producers have seen their inventories return to low levels, and with their well-integrated industrial chains providing stronger risk resistance, they are expected to gradually absorb this price increase once costs stabilize. After the Spring Festival, as terminal demand for polyester recovers, the fundamental supply-demand dynamics in the polyester market are expected to improve, and profitability levels are also anticipated to recover.
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