Polyester demand rebounds as China-US talks boost sentiment, supply stress looms

The China-US Geneva Economic and Trade Talks on May 12 led to a rise in crude oil prices and revitalized confidence in the polyester industry. Direct-spun PFY sales exceeded 500 per cent that day, while POY and FDY inventories dropped to historical lows. PSF sales rose, though destocking lagged PFY. PET fiber chip saw a sales spike, but momentum slowed midweek. PET bottle chip demand remained weak amid high prices.

Operating rates for DTY and fabric mills rose in Zhejiang and Jiangsu, with some dormant plants preparing to resume. Grey fabric and DTY inventories declined, and US orders mainly from Amazon and Walmart were revived, facing a tight 90-day delivery window due to a 24 per cent tariff. Shipping routes to the US hit full capacity before end-May, pushing up freight rates by $1,000 per 40HQ.

Rising feedstock prices across the polyester chain have widened upstream margins but left downstream profits squeezed. Some PFY firms plan production cuts due to unprofitable lines. Major producers face increased raw material stress, especially in PET bottle chips with low MEG self-sufficiency.

Speculative restocking, export growth, and domestic demand are supporting current sales, but cost pressure and potential production curbs may reshape the market outlook in the coming weeks.