Tensions in the Middle East are escalating again, with the US and Iran opposing each other's proposed peace plans, each deeming the other's proposals unacceptable. While news reports suggest a ceasefire in the Middle East, the so-called ceasefire between Iran, the US, and Israel seems somewhat like a word game. On May 7-8, 2026, a fierce military clash erupted between three US destroyers and the Iranian Islamic Revolutionary Guard Corps when the latter forcibly transited the Strait of Hormuz. Both sides fired on each other, yet afterwards still declared a ceasefire. The logic that firing does not equate to a ceasefire is indeed baffling. The current reality in the Middle East is that the conflicts between the various parties are irreconcilable, each bound by interests and public opinion, unable to back down, yet lacking the power to decisively resolve the situation. At the same time, both sides could potentially close the Strait of Hormuz, and the strait holds a crucial lifeline for both, ultimately leading to a protracted standoff.
However, while the escalating tensions in the Middle East have caused oil prices to rebound, the price of polyester filament has actually fallen in the past two days. This week, several polyester factories launched promotional discounts, causing polyester filament prices to drop by 100-200 yuan/ton. The average sales-to-production ratio reached 140.5%, which can be considered effective, but the effect was limited. Behind these promotional efforts is a large backlog of polyester filament inventory. Currently, the average inventory days for sample polyester filament companies is 32.3 days, a 12.2% increase month-on-month and a 44.2% increase year-on-year. FDY and DTY inventories are both over a month's supply. POY inventory is currently around 27-28 days, but compared to the same period last year, POY inventory has increased significantly, with a month-on-month increase exceeding 60%.
However, for textile companies, facing these promotional polyester filament offers, it's not that they don't want to buy, but rather that they are simply unable to do so. Since May, weaving costs have remained high, and finished product prices have gradually increased, with downstream acceptance clearly insufficient. On the other hand, in March and April, many textile companies were still fulfilling orders placed in advance by old customers due to market inertia, and had also prepared some raw materials in advance to ensure profits.
However, now that those orders have been exhausted, and new orders are being settled at current costs, downstream customers are finding the prices unacceptable. Previously, when there were no orders, textile companies would often keep their machines running to maintain inventory. However, with current raw material prices, maintaining inventory of regular products is meaningless; no matter how much is kept, it will result in losses. Therefore, more and more downstream customers are taking holidays, and even those that are running are mostly not operating at full capacity, naturally reducing the demand for polyester filament. Overall, with crude oil prices remaining high, even if polyester plants offer promotions and price reductions, they cannot lower prices to the downstream customers' psychological price level, offering limited help in clearing inventory. If this situation continues, it is possible that polyester plants will further increase production cuts in the future.
