Crude oil prices experienced a notable decline on July 1. WTI crude broke through the $69 and $68.5 thresholds successively, eventually closing at $68.22 per barrel, the lowest level since February 27. Brent crude also weakened, falling over 2% intraday and briefly dipping below $72 per barrel. This is not merely short-term volatility but could have a transmission effect on chemical fiber costs in the textile supply chain.
Raw Material Cost Logic
The textile industry's sensitivity to crude oil mainly stems from basic chemical raw materials such as PTA, ethylene glycol, and caprolactam, which are core precursors for bulk synthetic fibers like polyester and nylon. When crude oil falls more than 2% in a single trading day and hits a multi-month low, it indicates that cost support for intermediates like naphtha and PX is loosening. For PTA, the price linkage with crude oil typically manifests within one to two weeks.
According to industry data, polyester filament yarn prices remained in a high range during the first half of 2026, with downstream weaving companies showing weak willingness to stock up. If crude oil remains low, polyester plants may face inventory depreciation risks, but conversely, it provides bargaining space for downstream procurement.
Industrial Cluster Reactions
This oil price drop occurred during the traditional off-season in summer. Major textile clusters such as Keqiao, Shengze, and Nantong are currently in a transition period for orders—autumn/winter fabric sampling has begun, but mass production has not yet started. Weaving mill operating rates are generally between 60% and 70%, with raw material procurement mainly for just-in-time replenishment.
At this juncture, the weakening cost expectations may further intensify downstream wait-and-see sentiment. For chemical fiber traders, the risk of holding high-priced inventory is rising. For grey fabric and finished fabric mills, if they can seize this window to lock in low-cost raw materials, they may achieve better gross margins in subsequent autumn/winter orders.
Price Expectations and Operational Impact
It is noteworthy that crude oil prices have fallen to their lowest since February 27. Looking back, late February was the starting point for a concentrated price surge in textile raw materials after the Spring Festival. The return of oil to this level suggests that the cost bubble accumulated in the first half of the year is being squeezed out.
- For polyester plants: Be alert to the overlap of high inventory and downward price pressure; some companies may initiate production cuts to support prices.
- For weaving enterprises: Temporarily slow down raw material procurement and wait for further price corrections in PTA and polyester yarn before batch purchasing.
- For foreign trade companies: If locking in exchange rates for forward orders, monitor the linkage between the renminbi exchange rate and oil prices. A weaker crude typically accompanies a stronger dollar, so comprehensive assessment of exchange costs is needed.