On June 26, the international crude oil market experienced sharp volatility. Brent crude extended its daily decline to 4%, closing at $72.17 per barrel, while WTI crude lost the key $70 per barrel level, hitting a low of $69.33 per barrel with an intraday drop of 2.81%. This marks the largest single-day decline for both benchmark crudes since March this year, creating rapid downward pressure on downstream petrochemical and textile chemical fiber supply chains.
Cost Impact: PTA and Polyester Bear the Brunt
Crude oil is the source of the polyester industry chain. A 4% drop in Brent crude theoretically means naphtha and PX (paraxylene) costs will move lower. According to industry public data, PTA (purified terephthalic acid) production costs have PX accounting for over 60%, and PX prices are highly correlated with crude oil fluctuations. This sharp oil price drop is expected to directly reflect in PTA spot quotes within the next week, with a potential decline of 200-300 yuan per ton.
Polyester filament yarn and staple fiber, as direct downstream products of PTA, also face a collapse in cost support. The textile market is currently in a traditional off-season, with weaving mill operating rates generally at 60-70% and raw material inventories mostly at low levels. After the oil price crash, chemical fiber factories' willingness to hold prices will quickly weaken. Some polyester factories may announce price cuts as early as early next week.
Inventory Cycle Procurement Window: Bottom Fishing or Waiting?
For textile fabric and garment manufacturers, this crude oil crash offers a short-term raw material procurement window. However, caution is needed: this oil price drop is not purely technical. From a macro perspective, multiple factors—including slowing global economic growth expectations, OPEC+ production increase rumors, and a strengthening US dollar—create uncertainty for oil's medium-term trajectory.
This means the price bottom for polyester and PTA has not yet been clearly established. If oil continues to fluctuate around $70 per barrel, chemical fiber raw materials may enter a gradual decline phase rather than a one-time adjustment. For cash-rich companies, small batch purchases can lock in low-priced supplies. For companies with fast inventory turnover, maintaining a just-in-time procurement strategy is recommended to avoid being trapped at temporary highs by rushing to bottom fish.
Regional Industrial Belt Reactions: Spot Market Tests in Keqiao and Shengze
In major textile industry clusters, spot markets have shown tentative price cuts. At the Keqiao Light Textile City in Shaoxing and the Shengze Oriental Silk Market in Wujiang, traders of conventional polyester fabric varieties such as taffeta and pongee proactively lowered quotes by 50-100 yuan per ton on the afternoon and evening of the 26th, but trading volumes did not significantly increase.
Downstream weaving mills generally adopt a wait-and-see attitude. Some factories indicate that while lower raw material costs help ease profit pressure, terminal orders have not increased. High inventories in European and US markets, along with order diversion to Southeast Asia, mean demand recovery is slower than the decline in costs. Therefore, the benefit from the oil price crash is more likely to be passed on by chemical fiber factories as concessions in the short term, rather than a substantial improvement in weaving mill profit margins.
Exchange Rates and Import Costs: Dual Variables in Play
It is worth noting that crude oil is priced in US dollars, while the Chinese yuan exchange rate has also fluctuated recently. If the yuan depreciates more than the oil price falls, the actual cost reduction for imported naphtha and PX will be partially offset. Textile foreign trade companies need to monitor the combined changes in crude oil and exchange rates, avoiding single-factor judgments based solely on dollar-denominated oil prices.
Practical Recommendations
For Purchasers - Closely monitor PTA futures at the start of next week. If the main contract breaks below 5,600 yuan per ton, consider buying hedging operations in the futures market. - Lock in polyester filament yarn spot orders in batches. It is recommended that each purchase volume not exceed 30% of monthly usage, completed in 2-3 batches to cope with possible oil price rebounds. - For companies with overseas raw material procurement needs, consider locking in forward settlement exchange rates in advance to hedge against yuan depreciation risks.
For Foreign Trade Enterprises - Add price adjustment clauses in export quotations, clearly stating that when raw material cost fluctuations exceed 10%, both parties will renegotiate unit prices. - Monitor changes in inquiries from Southeast Asian clients. Oil price drops may give some Southeast Asian chemical fiber factories a cost advantage; prepare competitive product comparison data in advance. - Use the oil price drop window to sign quarterly or semi-annual fixed-price contracts with long-term customers to stabilize export profits.
Overall, this crude oil crash is a stress test for the textile chemical fiber supply chain. In the short term, the downward shift in costs provides breathing room for downstream enterprises. However, the medium-term trend still depends on the strength of macroeconomic recovery and geopolitical games. It is recommended that companies maintain flexible inventory management and avoid excessive speculation.