Weekly Polyester Market Review (July 7) | Stable Yet Cautious Amid Raw Material Fluctuations

Crude Oil Market Overview and Impact

Recently, international crude oil prices showed a slight weakening trend. The robust U.S. labor market continues to support the Federal Reserve’s decision to maintain high interest rates, while trade tensions persist due to slow progress in U.S.-China tariff negotiations. According to OPEC+, total production in June increased by 360,000 barrels per day to 28 million barrels per day, with Saudi Arabia contributing about two-thirds of this growth. Additionally, the U.S. has passed legislation ending long-term subsidies for solar and wind energy, signaling a policy shift favoring traditional energy production.

During the U.S. Independence Day holiday on July 4, both WTI (August) and Brent (September) crude futures edged lower. The market expects that with further production increases from OPEC+, crude prices may face downward pressure over the next 6 to 12 months. This softer oil price environment is impacting costs for downstream raw materials such as PX.

Raw Materials: Price Corrections and Cost Pressure

PX prices declined last week amid scheduled maintenance of some domestic units, though overall operating rates remain relatively high. Overseas supply is gradually returning, leading to a balanced supply-demand situation.

PTA experienced fluctuating operating rates, with slight increases in load. Prices trended downward, accompanied by significant narrowing of spot basis and processing margins, resulting in subdued market activity.

Ethylene glycol supply is gradually easing while downstream demand softens, pressuring prices to remain in a lower range in the short term.

Production and Inventory Developments

Key PX and PTA facilities have entered maintenance or reduced operations recently, with increased scale and duration compared to previous periods. Some major PTA plants are undergoing adjustments or temporary shutdowns, resulting in varied supply rhythms. Though new capacity is being commissioned, it has yet to significantly increase supply volumes. Ethylene glycol production from coal chemical processes has risen notably, while some overseas units remain under commissioning or maintenance, maintaining an overall loose supply picture.

Inventory data show PTA and ethylene glycol stock levels remain at moderate to high ranges and have increased noticeably month-on-month, reflecting ongoing inventory buildup. Factory stockpiles are also accumulating, particularly for ethylene glycol due to weakened demand. These factors maintain cautious market sentiment in the near term.

International Market and End-Use Demand

Exchange rate fluctuations of the RMB and elevated international shipping costs have narrowed export price negotiation margins. As a result, trading firms have adopted more prudent procurement strategies, with market participants generally maintaining a watchful stance. Demand from major export destinations remains stable, though certain trade channels face increased risks of slow-moving stock.

Downstream sectors such as beverage production and packaging have seen decreased operating rates, with the usual seasonal peak yet to materialize. End-user purchasing remains focused on essential replenishment, reflecting a steady but measured demand pace. The bottle-grade PET market remains stable, though inventory pressures persist, and the overall supply chain is experiencing a slow destocking process, with market liquidity at a moderate level.

Bottle-Grade PET: Steady Demand Supports Market Amid Fluctuations

In the past week, bottle-grade PET prices have followed upstream raw material declines with modest adjustments. Market processing margins improved slightly, encouraging gradual replenishment activity by both traders and downstream customers. Several Q3 orders are being confirmed, underpinning a rational purchasing rhythm.

On the cost side, raw material supply shows relative firmness in the near term but weakness expected further out, with polymerization costs maintaining a soft, oscillating pattern. Production-wise, some bottle-grade PET manufacturers have initiated maintenance plans, resulting in slightly lower operating rates. However, the impact of production cuts on overall market supply remains limited at this stage.

Looking ahead, processing margins are expected to widen modestly as production reductions take fuller effect, yet prices are likely to remain in a stable to slightly softer range. Key factors to monitor include the execution of ongoing maintenance plans and fluctuations in RMB exchange rates and freight costs, which may influence export volumes and pricing.

Notably, while market activity has improved, end-use demand remains cautious, with some producers managing sales carefully. Inventory accumulation continues, but overall market liquidity remains healthy. Continued observation will be essential to gauge future market direction.

Conclusion

Looking forward, market stability is expected with slight softness in prices as maintenance effects materialize and macro factors continue to influence trade and logistics. Wankai New Materials remains dedicated to monitoring these developments and supporting partners with timely insights to navigate this evolving landscape.