A surge followed by a round of corrections: the chemical market experiences a tug-of-war between bullish and bearish forces, and textile raw materials fluctuate accordingly.

Recently, the chemical market has experienced a rare ‘roller-coaster’ trend in recent years. From the abrupt halt of short-covering before the holiday, to multiple varieties hitting the daily limit on the first day after the holiday, and then to a bottom rebound under low inventory levels, within just one week, the chemical futures and spot markets have witnessed intense fluctuations driven by emotions and fundamentals. The impact has quickly spread along the industrial chain to the downstream textile and chemical fiber industry.

The ‘sudden brake’ on pre-holiday short-covering led to a concentrated release of bullish sentiment. At the end of September, the chemical futures market showed significant signs of short-covering, but the trend abruptly stopped under regulatory intervention. On October 8, with the opening of chemical futures, bullish sentiment ‘ignited,’ leading methanol, benzene, and styrene to surge, hitting daily price limits for multiple varieties, with the spot market following suit sharply; during the night session of the same day, chemical futures again gapped up and advanced further. On October 9, although most varieties shifted to high-level fluctuations, the spot market remained exuberant, with several chemical spot prices reaching multi-year highs.

Downstream negative feedback is released in concentration, and the market transitions from prosperity to decline. On October 10, there was no futures guidance, but persistently high prices sharply increased downstream procurement cost pressures, leading to concentrated release of negative feedback and a slight decline in the spot market under pressure. From October 12 to 13, the chemical futures and spot markets began to fall sharply, rapidly eliminating the previously inflated sentiment bubble.

Low inventories provide support, and the market experiences a temporary rebound. After continuous adjustments, on October 14, supported by low inventory levels and tight spot market fundamentals, the chemical futures and spot markets collectively saw a minor rebound. This rebound is mostly a recovery after an oversell, and whether it can continue remains to be observed.

Industrial chain linkage has led to the textile chemical fiber sector bearing pressure first. The chemical industry is the most important upstream sector for the textile chemical fiber industry. In this round of market conditions, chemical fiber raw materials such as polyester filament, PTA, and ethylene glycol are the most directly affected by fluctuations in chemical futures and spot prices. In the early stage after the holiday, the surge in chemical prices drove up the quotations of polyester filament and other products, but downstream weaving and dyeing enterprises were noticeably cautious in procurement, showing insufficient willingness to chase the rise; as chemical prices adjusted, the cost support for chemical fiber raw materials weakened, and polyester filament prices correspondingly eased, with some enterprises returning to the rhythm of “producing according to sales and replenishing according to demand.” Although varieties such as cotton spinning and viscose are dominated by their own supply and demand, they are also disturbed by overall market sentiment. It can be said that every fluctuation in chemical market conditions directly affects the redistribution of costs and profits along the textile industry chain.

Market Outlook: Returning to Fundamentals

Emotions are cooling down, returning to fundamentals. In the short term, after the extreme fluctuations, the chemical market is entering a period of sentiment correction. Low inventory levels provide some support for prices, but the negative feedback on the demand side has not yet been fully absorbed, and downstream sectors are mainly adopting a wait-and-see approach. It is expected that future market trends will gradually return to being dominated by fundamentals, with differentiated trends across various products. The supply-demand pattern and changes in inventories will become the core variables determining price direction. For the textile industry, increased volatility on the raw material side highlights the growing importance of procurement timing and inventory management.