On June 26, international oil prices fell more than 4% in a single day, with Brent crude closing at $71.99/barrel and WTI crude losing the $70 mark. For the textile industry, this is not an isolated market fluctuation but a direct signal impacting the cost center of the chemical fiber supply chain.
Cost Side: Short-term Relief for Chemical Fiber Raw Materials
Crude oil is the source of the polyester industry chain. The simultaneous plunge of WTI and Brent means that the production costs of core chemical fiber raw materials such as PTA and MEG will experience a phased decline. According to industry public data, the correlation between PTA prices and crude oil prices has long remained above 0.85. Brent's single-day drop of $3.27 could theoretically reduce PTA production costs by about 150-200 yuan per ton. For polyester filament and staple fiber producers, this is undoubtedly a breathing window—especially against the backdrop of insufficient terminal orders and high inventory.
Transmission Chain: Price Lag from Crude to Fabric
It is noteworthy that the positive cost-side effect cannot immediately translate into lower fabric prices. The entire transmission cycle from crude oil to PX, PTA, polyester chips, polyester yarn, and finally to weaving typically takes 2-4 weeks. Moreover, current polyester plant operating rates generally remain above 85%, limiting supply-side flexibility. This means that even with a sharp drop in oil prices, the ex-factory price adjustments for chemical fiber products may be smaller than the cost reduction, potentially widening processing margins in the short term. For fabric buyers, the cost dividend from this oil price decline is expected to gradually reflect in grey fabric quotations only in mid-to-late July.
Industrial Cluster Response: Wait-and-See Sentiment in Shengze and Keqiao
In major textile industry clusters like Shengze and Keqiao, market reactions to the oil price crash are mixed. Some polyester plants have started to lower quotations for polyester DTY and FDY by 50-100 yuan/ton, but actual transactions remain largely demand-driven. Traders generally adopt a wait-and-see approach, believing that oil prices may not have bottomed out. Historically, WTI crude tends to find strong support and face a tug-of-war around $70/barrel. If OPEC+ signals production cuts subsequently, prices could rebound quickly. Therefore, downstream weaving enterprises have not engaged in large-scale bargain stockpiling but instead maintain a cautious 'buy-as-you-go' strategy.
Long-term Game: Weak Demand Suppresses Cost Dividends
The biggest offset to the benefit of lower oil prices comes from weak end-user demand. Current global textile and apparel retail data are sluggish, destocking in European and American markets is slow, and the recovery of orders from Southeast Asia is limited. Data from the National Bureau of Statistics shows that from January to May 2025, textile industry export value fell by approximately 3.2% year-on-year. Without substantial demand recovery, any cost-side reduction is unlikely to translate into excess profits for enterprises; instead, it may intensify price competition among products.
Practical Recommendations
For Buyers - Focus on the grey fabric quotation adjustment window in mid-to-late July, especially for conventional polyester varieties like taffeta and pongee, where there may be a 2-3% room for negotiation. - Avoid large one-time contract locks; consider phased procurement to hedge against the risk of oil price rebound.
For Chemical Fiber Mills - Take advantage of the current low oil prices to moderately increase raw material inventory of PX or PTA, locking in production costs for the next 1-2 months. - Be cautious of downstream customers demanding price cuts using the oil price drop as leverage; respond flexibly based on inventory costs and order structure.
A single-day plunge in oil prices offers a brief relief window for the textile chemical fiber chain, but the industry's real challenge remains in reshaping the supply-demand balance.