International oil prices accelerated their decline on July 2, with WTI crude falling over 2% intraday to a low of $67.20 per barrel, while Brent crude broke below $71 and edged toward the $70 mark, hitting its lowest level since late February. This movement is not an isolated fluctuation but continues a steady decline that began in mid-June. The transmission effect on the textile chemical fiber chain is now spreading from upstream raw materials to midstream polyester and downstream weaving sectors.
Cost Side: PTA and MEG Hit First
Crude oil price fluctuations typically transmit to PTA and MEG within one to two weeks through intermediates like naphtha and PX. Current spot PTA prices have fallen approximately RMB 300/ton from their June highs, while MEG has seen even sharper declines, with some East China port quotes dropping below RMB 4,000/ton. For polyester plants, this means marginal cost relief but also greater inventory devaluation risk. Industry data shows average polyester plant raw material inventories stood at 15-20 days at end-June; sustained low oil prices would pressure these stock values.
Notably, PTA processing margins have compressed from over RMB 500/ton in May to around RMB 300/ton currently, leaving some high-cost facilities near breakeven. Even if oil stabilizes, PTA's own supply-demand fundamentals offer little support for price recovery—approximately 4 million tons of new domestic PTA capacity came online in the first half of 2026, maintaining oversupply pressure.
Polyester: Price Expectations Turn Bearish
Polyester filament yarn and staple fiber, as direct inputs for weaving, primarily price follow PTA and MEG costs. Following the oil price drop, major polyester filament mills in Jiangsu and Zhejiang lowered quotes on July 2-3, with POY 150D/48F falling from RMB 7,450/ton to around RMB 7,300/ton, a decline of roughly 2%. More critically, downstream weavers generally adopt a "buy on rising, not falling" strategy, actively reducing purchases during price downturns, causing polyester plant sales-to-output ratios to plunge from 80-90% in late June to below 50%.
Feedback from weaving clusters in Shaoxing and Xiaoshan indicates some small-to-medium mills have cut raw material stocking cycles from seven days to three to avoid price risk. If this wait-and-see sentiment extends into mid-July, it will directly drag on polyester plant operating rates. Current polyester operating rates hover around 88%, but persistently weak sales may force some plants to voluntarily cut output for maintenance.
Practical Impact on Textile Exports and Procurement
Falling oil prices are not entirely negative for textiles. For exporters of polyester, nylon, and other chemical fiber fabrics, lower raw material costs expand export pricing room, helping maintain competitiveness against Southeast Asian rivals. However, the benefit is hard to fully capture amid current RMB exchange rate volatility and weak overseas orders—buyers typically demand parallel price cuts rather than allowing sellers to retain cost savings.
Timing is critical: Q3 is the peak ordering period for Christmas orders from Europe and the U.S., and a key window for Chinese textile firms to lock in raw material costs. If oil trades persistently in the $67-70/barrel range, chemical fiber raw material prices will likely complete a 5-8% decline by mid-July, forcing fabric export quotes down 3-5%.