Lead: Recent US–Iran tensions have seesawed repeatedly. Earlier market expectations for a US–Iranian detente were fully priced out, but the recovery of crude exports from Gulf states partly eased supply concerns, keeping geopolitical premiums contained. Cost-side dynamics have thus remained caught in a repeated tug-of-war. On August 31, US forces carried out a nighttime operation in the Strait of Hormuz, and Iran’s Revolutionary Guards signaled retaliation, reigniting the US–Iran conflict. The crude oil geopolitical risk premium quickly rebounded, strengthening the cost-driven impulse. Still, expectations of ample long-term overseas crude supply and demand recession continued to cap the upside for oil prices. On the industry side, the battle between reality and expectations intensified. The sales pulses in the polyester chain were only partial and episodic, mostly restocking for rigid needs; there was no substantive recovery in end demand. Even with a major supplier’s planned turnaround in Dalian, supply–demand fundamentals were gradually moving toward daily inventory accumulation, and the logic of rising supply alongside weak demand remained intact. Taken together, the market is being pulled back and forth among the geopolitical risk premium, cost support, and industry inventory accumulation expectations, leaving absolute and spot prices highly sensitive to headlines.
Core Logic:
Costs: The US–Iran detente fell through, and Gulf crude export recovery caped the geopolitical premium. However, mutual US–Iran strikes lifted the crude geopolitical premium anew, giving a clear boost to costs. During the week, expectations around the midterm elections limited speculative bets on further escalation, causing the crude premium to retreat temporarily and cost support to loosen. Costs have been highly volatile. PX units have resumed, but spot liquidity remains tight, with the market still quickly switching direction in line with Middle East headlines.
Supply–demand: The brief spike in polyester sales toward the end of the session was merely rigid-demand replenishment rather than a genuine recovery in terminal demand. Downstream buying sentiment generally remained cautious, with little willingness to actively restock. As idled units gradually return, the industry supply–demand pattern is steadily shifting toward daily inventory accumulation. The fundamental picture of rising supply and weak demand is still wrestling with the geopolitical cost driver.
I. Industrial profit distribution: costs fluctuate with geopolitics, compressing polyester profits
Rapid geopolitical headlines from the crude side drove naphtha and PX prices to fluctuate sharply along with costs, and the PX margin shifted with the crude complex. As of this week (August 28–September 3, 2026), chain prices moved higher, with naphtha, PX, and PTA up 4.28%, 4.60%, and 1.14% week on week, respectively. Polyester products diverged: polyester filament, polyester staple fiber (PSF), PET bottle chips, and PET chips rose 1.62%, 2.96%, 3.94%, and 3.31%, respectively. Looking at margins, the PX–naphtha spread narrowed, although the weekly average still rose 5.56% week on week to US$285.72/t. PTA processing margins also contracted, falling 27.00% to RMB 494.61/t. With melt costs at high levels, polyester producers’ margins diverged. PSF remained loss-making, extending output cuts; bottle-chip margins recovered but supply cuts continued; filament retained slim profits, though there are also cut expectations.
II. Supply environment: supply recovery expectations unchanged, geopolitical risks disrupting trade flows
During the week, previously idled PTA units continued to restart, and the broader direction of supply returning was unchanged. Yet the escalation of the conflict has created new uncertainty over the restoration of shipping through the Strait of Hormuz, disrupting import logistics for raw materials. The market still worries over PX tightness arising from refinery run rates and the return of PTA supply.
Regarding units, Honggang #2, Jiaxing #1, and Fuhai Chuang are gradually resuming. Dahua #1’s restart has been delayed, while Dalian #2 is planning maintenance, which has somewhat slowed the daily inventory-building process.
Regarding basis, as the typhoon effect fades, the fundamentals of rising supply and weak demand are clear, and spot prices and cargo prices still show a gap. As of today, transactions for main-port delivery this week and next week were concluded at a premium of RMB 320–380/t over the January futures contract, with spot slightly higher. Deals and talks for main-port delivery before month-end are at a premium of RMB 200–300/t over the September contract.
III. Demand environment: rigid demand only, no active restocking, and a lack of real demand recovery
Recently, no substantive recovery signals have been seen in the textile end market. Downstream buying remains limited to rigid needs, with no active restocking. Since geopolitical factors have pushed raw material costs higher, downstream factories cannot sustainably absorb expensive feedstock for long, so sales volumes only rise episodically alongside costs. MEG weakness is particularly prominent, prompting some downstream polyester plants to cut or halt operating rates and resell feedstock. Even where filament margins remain positive, some plants are planning output cuts or stoppages.
During this cycle, the average sales-to-output ratio for polyester filament was 66.66%, up 14 percentage points from last week. POY plant inventory stood at 16.9 days, up 1.8 days from the prior period; FDY plant inventory was 21 days, up 0.7 days; and DTY inventory was 23.2 days, up 0.8 days. Polyester staple fiber producers’ average sales-to-output ratio was 49.54%, down 11 percentage points from last week. On supply, weekly polyester industry capacity utilization was 75.01%, down 1.54 percentage points from the previous week.
Overall, geopolitical events will remain the dominant variable in the short term. Continued US–Iran conflict and the risk of a strait blockade could provide some supportive strength, but rising supply and weak demand mean fundamentals will cap the upside. If geopolitical tensions are constrained, the market is prone to news-driven declines and will shift into range-bound trading. On a medium-to-longer horizon, the expectation of PX and PTA supply returning remains unchanged, which, together with weak polyester downstream demand, keeps the fundamental bias bearish.
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