A sharp drop in crude oil sends ripples through the textile industry. On June 26, international oil prices tumbled significantly, with WTI crude settling at $69.23 per barrel, down 3.74%, and Brent crude closing at $71.99 per barrel, down 4.34%. Intraday losses reached as high as 4%, with WTI touching $68.47 and Brent $72.17.
For the textile sector, oil prices are more than just an energy cost. They serve as the pricing anchor for the entire polyester chain—from PX to PTA to polyester filament and staple fiber. Every margin calculation in this chain ultimately traces back to crude oil.
Cost Transmission: How Tight Is the Chain from Oil to Polyester?
Polyester raw materials account for over 85% of the production cost of polyester filament, and PTA's upstream, PX, is itself a derivative of naphtha cracking. Industry estimates suggest that every $1 per barrel change in crude oil shifts PTA costs by approximately 35-40 yuan per ton and indirectly affects polyester filament costs by 50-60 yuan per ton. With oil falling nearly $3 in a single day, the theoretical cost support for PTA drops by about 100-120 yuan per ton, and for polyester filament by 150-180 yuan per ton.
While this transmission is not instantaneous, market expectations adjust quickly. On the night of the oil crash, PTA futures on the Zhengzhou exchange fell over 2%, and polyester filament factories are likely to lower their ex-factory quotes the following day.
Industry Impact: Cost Comfort vs. Inventory Anxiety
For textile mills, the sudden oil price decline presents a double-edged sword.
On the positive side, upstream cost pressure is temporarily relieved. Throughout 2025, polyester filament prices have remained elevated, squeezing downstream weaving mills' margins. In clusters like Shengze and Changxing, water-jet loom operating rates have fallen below 70% in late June, as high greige fabric inventories and tight cash flow force small mills to cut production. Lower oil prices could compel polyester plants to reduce prices, passing some relief downstream.
On the flip side, inventory risk looms large. Mills that stocked up on polyester POY at prices above 7,500 yuan per ton in mid-June now face asset depreciation and pricing difficulties for their greige fabrics. Traders will quickly lower their purchase expectations, leading to inventory write-downs across the supply chain.
Procurement Strategy: To Buy or to Wait?
Historically, after a single-day oil price plunge exceeding 4%, a technical rebound or low-level consolidation typically occurs within a week. The key for textile mills is to determine whether this decline is a short-term panic or a trend reversal.
The current downward pressure stems from heightened concerns over global economic slowdown and rising expectations of increased output from major producers. If this logic holds, oil may test the $70 level repeatedly rather than staging a V-shaped recovery. This suggests that the bottom for polyester raw materials has not yet been confirmed, and mills should avoid rushing into large-scale restocking.
A more prudent approach is to maintain low inventory levels of 15-20 days, take advantage of monthly average pricing or point-based pricing schemes offered by polyester plants during downturns, and lock in costs for forward orders without chasing falling prices.