On the night of June 26, Brent crude oil rapidly widened its intraday decline from 2% to 4% within seven hours, closing at $72.17 per barrel, while WTI crude fell below the $70 mark to $69.33 per barrel. This marks the first single-day drop exceeding 3% since the fourth quarter of 2025, with the decline accelerating through the trading session, suggesting market sentiment has shifted from caution to panic selling.
For the textile industry, oil prices are not a distant economic indicator but a direct anchor for the cost of petrochemical-based raw materials. Core textile inputs such as PTA, ethylene glycol, polyester filament yarn, and polyester staple fiber are highly correlated with oil prices. For PTA, approximately 60% of its production cost comes directly from PX (paraxylene), whose pricing benchmark is the spread between naphtha and Brent crude. When crude falls 4% in a single day, the theoretical cost support for PX and PTA shifts downward simultaneously, a transmission that typically completes within three to five trading days.
Cost Transmission and Inventory Dynamics
The current textile supply chain is at a delicate equilibrium. Upstream, PTA social inventory has remained above 2.8 million tons for three consecutive weeks. Although polyester plant operating rates hover around 85%, downstream weaving mills generally maintain low raw material inventory, typically only 7 to 10 days of safety stock. This means that once crude's sharp drop triggers PTA price cuts, polyester plants will face a scissors gap between 'high-cost inventory' and 'low-priced new orders,' forcing them to cut prices and de-stock, squeezing their own margins.
Downstream, operating rates in major weaving clusters like Shengze, Changxing, and Xiaoshan have slipped from 78% in May to about 72%, while greige fabric inventory days have risen from 25 to 32. Terminal apparel export orders remain weak under high interest rates in Europe and the US, and domestic demand shows no significant improvement. This pattern of 'high upstream operating rates, low downstream orders' means any cost-side loosening could be amplified into a price-cutting expectation across the entire chain.
Industry Impact: Whose Profits Will Be Redistributed?
The impact of a sharp oil price drop is asymmetric across different segments. For large petrochemical companies with integrated PTA and polyester capacity, falling crude means lower raw material procurement costs. If product price declines are smaller than raw material declines, their processing margins may actually expand. However, for small and medium-sized weaving and texturing enterprises that rely primarily on polyester filament and staple fiber, the situation is starkly different—they face direct impairment of high-cost raw material inventories, while downstream customers, under bearish market sentiment, will further delay purchases, creating a negative feedback loop of 'the more prices fall, the less people buy.'
The export segment is also under pressure. Textile industries in Southeast Asia, dominated by synthetic fibers like polyester and viscose, have their raw material pricing linked to international oil prices. If this oil price decline persists, it will lower export quotes from Vietnam, Bangladesh, and other countries, squeezing the price competitiveness of Chinese textiles. However, if the renminbi weakens due to falling oil prices, it may partially offset this effect.