China polyester yarn prices fall after inventory rise

China's polyester filament yarn (PFY) prices dropped for the first time in two months due to a combination of factors. PFY plants are sitting on a month's worth of inventory after weak sales in July. Downstream textile mills are also reducing production due to high temperatures and falling orders.

Crude oil and polyester feedstock prices have declined recently, reducing production costs for PFY manufacturers. This allows them to lower prices while maintaining healthy profit margins.

Leading PFY plants are still reducing production to control inventory, but are switching some capacity to polyester chips to minimize cost increases. With lower PFY prices, downstream mills are expected to resume buying, easing inventory pressure for producers.

Overall, the price cut is a strategic move by leading PFY companies to manage inventory and maintain profitability despite the off-season slowdown.