Brent Crude Dips Below $71, Cost Support for Chemical Fiber Raw Materials Faces Erosion

Brent crude oil fell below $71 per barrel during trading on July 2, 2026, with an intraday decline of 1% to a low of $70.54, the lowest level since late February. For the textile industry, this is not just an energy headline—it directly reshapes the cost structure of chemical fiber raw materials.

Cost transmission chain activated

Crude oil is the origin of the polyester chain. From naphtha to PX (paraxylene), then to PTA (purified terephthalic acid) and MEG (monoethylene glycol), and finally polymerized into polyester filament and staple fiber, each step's pricing is highly correlated with oil. Brent's decline means the naphtha cracking spread may narrow, dragging down spot quotes for PX and PTA. According to industry public data, every $1/bbl drop in oil reduces PTA theoretical costs by about 35-40 yuan/ton. Based on the intraday maximum drop of roughly $0.7/bbl, the potential cost reduction for PTA is 25-30 yuan/ton.

Polyester mills face dual pressure on inventory and pricing

Currently in the summer textile off-season, polyester mills in Jiangsu and Zhejiang operate at about 85% capacity, but downstream weaving orders are insufficient, causing polyester product inventories to accumulate. Weaker oil prices directly undermine polyester mills' ability to support prices based on high-cost inventory. Some mills may be forced to cut polyester filament quotes to stimulate sales, especially for POY and FDY varieties, further squeezing their profit margins. Meanwhile, downstream weaving companies generally adopt a just-in-time purchasing strategy; under expectations of falling raw material prices, their restocking willingness will be more cautious, forming a phased negative feedback loop.

Impact on downstream weaving and foreign trade

For weaving clusters in Shengze, Changxing, and Xiuzhou, lower raw material costs are temporarily positive for profit repair, but only if grey fabric prices remain stable. However, end-brand apparel and foreign buyers are highly price-sensitive; once polyester filament prices fall, the bargaining power for grey fabric and finished fabric will also weaken. Foreign trade companies must pay attention: if Brent stabilizes around $70/bbl, overseas buyers may demand renegotiation or delay orders until raw material prices become clearer.

Practical recommendations

For buyers - Closely monitor Brent's support at $70/bbl; if it breaks below, consider phased small-lot purchases of polyester filament to lock in low costs. - Negotiate short-term price protection agreements or point-price contracts with polyester mills to avoid locking in large orders during a downward price channel. - For confirmed export orders, simultaneously lock in forward exchange rates when purchasing raw materials to hedge against potential passive RMB appreciation due to falling oil prices.

For foreign trade companies - Include crude oil price fluctuation adjustment clauses in quotation validity terms, e.g., when Brent fluctuates more than 3%, quotes can be adjusted accordingly. - When communicating raw material cost declines to overseas clients, use cautious language; avoid proactive price cuts, and instead offer "technical concessions" in exchange for longer payment terms. - Use futures instruments for hedging; for exposed portions of existing raw material inventory, establish short positions in PTA futures to offset inventory depreciation risks.