Polyester fibre: Cycles

Crude, cotton prices and the thin conversion margin

Polyester fibre prices follow crude oil through PX, PTA and MEG, with a thin conversion margin on top. The margin cycle depends on Chinese capacity additions and on the cotton price: when cotton is expensive, mills blend more polyester. In 2024 PSF stayed at $0.90-0.95/kg while cotton fell from $2.01/kg to $1.76/kg (Grasim, Cotlook and CCF), narrowing polyester's price advantage. In India, trade policy is a second cycle: QCOs from 2023 kept domestic prices above import parity until they were removed in November 2025.

The standard conversion spread tracked by Chinese and Indian producers. Indicatively about $150-250/t in 2024-2025 (basis: PSF about $900/t, PTA about $650/t, MEG about $510/t). CRISIL expects Indian yarn spreads to shrink 10-15% after the QCO removal.

Booms and busts

1. 2020

   COVID lockdowns cut apparel demand and crude fell below $20/bbl in April 2020 (toluene tile); MEG hit a record low near $350/t CFR China (MEG tile).

   PSF price not published in sources reached; MEG about $350/t (April 2020, indicative)

2. Late 2023-2024

   India's QCOs on polyester yarn (October 2023) and on PTA and MEG raised domestic input costs and protected local spinners. Globally, cotton weakened while polyester was flat.

   International PSF $0.92/kg (Oct-Dec 2023), $0.95/kg (Jul-Sep 2024), $0.92/kg (Oct-Dec 2024); cotton $2.01 to $1.80/kg (Grasim)

3. November 2025-2026

   India rescinded the polyester QCOs on 12 November 2025. CRISIL expects yarn makers' revenue growth of 3-5%, spreads down 10-15% and margins down about 100 bps to 5.5-6% next fiscal. US tariffs of 50% hit garment exports.

   PTA $649/t FOB China and $687/t CFR India (21 Jan 2026, Platts via PTA tile); MEG up nearly 8% in the week to 21 Aug 2026 (MEG tile)

What drives the cycle

• Crude oil, PX and MEG prices. Raw materials are about 80% of cost; the 2026 Gulf disruption lifted MEG and naphtha (MEG and benzene tiles).
• Cotton-to-polyester price ratio. Spinners switch blend ratios when cotton is dear; cotton was about twice PSF per kg in late 2024 (Grasim).
• Chinese capacity additions. Integrated groups keep adding 1-3 Mt/yr; utilisation and fees fall.
• Indian trade policy and US tariffs. QCOs and anti-dumping duties switch import flows; US tariffs cut Indian garment demand.

Metrics to track