As time passes, the textile market is nearing the end of its off-season. Currently, both upstream and downstream polyester markets lack significant drivers of market fluctuations, and are awaiting the arrival of the second half of the year's peak season.
OPEC+ held a ministerial meeting last weekend and agreed to increase oil production by a further 547,000 barrels per day in September. Industry statistics show that OPEC+ supplies approximately 45% of global oil daily and has been cutting production to support prices following the impact of the COVID-19 pandemic. This year, the group has shifted course, attempting to regain market share. Eight major producers, including Russia and Saudi Arabia, began increasing production in April, restoring 138,000 barrels per day. These increases were followed by 411,000 barrels per day in May, June, and July, and 548,000 barrels per day in August. September marked the early end of the group's current round of production resumptions, releasing approximately 2.5 million barrels per day of capacity, representing approximately 2.4% of global demand.
As a result, international oil prices continued to plummet on Monday, falling over 5% over the past two trading days. Media reports, citing two sources, indicate that major producing countries plan to meet again on September 7th, at which point they may consider resuming another round of production cuts totaling approximately 1.65 million barrels per day (bpd), originally scheduled to last until the end of next year. August 8th will be a crucial date. US President Trump has threatened to impose a 100% secondary tariff on buyers of Russian crude oil in an attempt to broker a ceasefire between Russia and Ukraine. JPMorgan Chase predicts this could put Russia's 2.75 million barrels per day (bpd) of seaborne oil exports at risk. Industry data shows that India imported approximately 1.75 million bpd of Russian oil from January to June of this year, a 1% increase from the same period last year. In response to previous pressure, Indian officials have denied any policy shift.
The recent decline in crude oil prices has not significantly impacted polyester filament prices. Following a concentrated replenishment drive in mid-July, downstream textile manufacturers are cautious, with buying remaining focused on solid demand. According to Longzhong data, the production-to-sales ratio of polyester filament has been between 30% and 40% since the end of July. While overall polyester filament supply has been relatively stable recently, the imbalance between supply and demand in the market has become more pronounced, leading to a corresponding increase in inventories. As of last Thursday, polyester filament inventory averaged 23.6 days, up 2.3 days from the previous week. FDY saw a significant increase. FDY is primarily used in spring and summer fabrics, with less usage in autumn and winter. This year, overall consumption in end-use sectors like apparel and home textiles has declined, with a particularly significant drop in sportswear and hoodies. This has led to intense competition in the FDY market, prompting some manufacturers to reduce their inventory levels to hedge risks.
In terms of prices, downstream manufacturers are becoming increasingly cautious, and without the support of upstream costs, the rise in polyester filament prices has stalled. However, current profit margins do not support further price declines. Currently, polyester mills face relatively little inventory pressure, and the polyester filament market is gradually entering a stable period. A new round of market activity may have to wait until the peak season arrives in the second half of the year.
At this stage, both upstream polyester and downstream weaving companies are implementing a wave of inventory management measures through production cuts, either proactively or reactively. On the upstream side, as polyester filament manufacturers currently have relatively low inventories, most manufacturers are adopting a wait-and-see approach, shipping according to market conditions. In the medium to long term, most industry players remain hopeful for the "Golden September and Silver October" period. Downstream, weaving companies are currently experiencing unprecedented production halts, with machine utilization rates dropping to around 50%, significantly lower than in previous years. This has also led to a decrease in market inventory for conventional products for the second half of the year this summer compared to the past two years. Once downstream orders recover, low inventory levels could help restore prices and profits for greige fabrics and fabrics. As is customary, autumn and winter orders gradually arrive after mid-August, boosting market demand and further anticipating a rebound in the polyester filament market.
