A sharp decline in oil prices has dragged down the polyester chain, with market fluctuations intensifying under the pressure of supply and demand.

In early November, the polyester sector emerged from the synchronized trend of “cost collapse and weak demand.” The rapid unwinding of the crude oil geopolitical premium drove down the valuations of PX, PTA, and ethylene glycol, while end-use weaving experienced off-season demand decline at the tail end of the traditional peak season. The decline in costs created room for price drops, and weak demand constrained the extent of any rebound, placing the industry chain into a high-volatility, weak-trend oscillation pattern.

Market Downturn & Crude Oil Logic

The current downturn in the market originates from the crude oil sector. Influenced by expectations of easing tensions in the Middle East, international oil prices continued to fall on November 10, with both New York and Brent crude retreating, and Brent even dipping intraday. The spot Brent discount continues to widen, reaching a five-month low, reflecting that the previous rise in oil prices was mainly driven by geopolitical risk premiums rather than actual supply-demand tightness.

As the situation eases, the premium quickly unwinds, and the cost logic shifts from event-driven to a valuation based on an oversupply fundamental. As the valuation anchor for the polyester chain, falling oil prices pull down the pricing benchmark for upstream materials. With the price decline pace inconsistent across the chain, profit redistribution occurs throughout the industry.

PTA processing fees have shown some recovery, but it is considered a passive recovery. On November 10, PTA spot prices in East China fell sharply while processing fees rose, essentially because the decline in raw material prices exceeded that of the finished product, rather than being driven by a rebound in demand. Although the supply side continued to shrink, with operating rates dropping and production declining year-on-year, inventory reduction was not achieved. Downstream polyester operating rates increased slightly, but terminal orders continued to weaken, with inventory merely shifting from the PTA segment to the polyester side, still leaning towards overall inventory accumulation. With low inventory combined with expectations of accumulation, PTA is unlikely to experience a one-sided market trend.

The trend of ethylene glycol is more complicated. Zhangjiagang spot prices fell slightly, domestic operating rates remained at medium levels, and inventories at East China ports accumulated slowly. Low absolute inventory provides a bottom support for prices, with the basis remaining relatively strong; however, expectations of increased domestic output and imports exist, coupled with limited potential for polyester growth, resulting in weak medium-term supply and demand. Supported by low inventory but restrained by weak expectations, ethylene glycol prices are expected to fluctuate within a range with amplified volatility.

Terminal Weaving Constraints

Foreign orders are nearing completion, mostly small quick-turnorders, lacking centralized procurement; domestic warm winter drags on winter clothing sales, resulting in insufficient domestic trade demand; continuously falling raw material prices foster a mentality of buying on rises rather than on falls, with enterprises only maintaining just-needed purchases. Grey fabrics and raw materials are accumulating in tandem, forming a negative feedback loop of price decline — wait-and-see — inventory buildup.