On July 7, the international crude oil market achieved a key breakthrough: WTI crude oil stood at $70/barrel with a daily gain of 1.64%, while Brent crude also rose 1% to $72.79/barrel. This price level is no ordinary number for the textile industry—it means that chemical fiber raw material costs will transmit from the cost side to the entire supply chain. Whether the current recovery rate of downstream orders can absorb this pressure is the question facing all practitioners.
Cost Transmission Chain
Crude oil is the most upstream raw material in the textile chemical fiber chain. From crude oil to PX (paraxylene), then to PTA (purified terephthalic acid) and MEG (monoethylene glycol), and finally polymerization to produce polyester chips, polyester filament yarn, and staple fiber. According to public industry data, for every $10/barrel increase in crude oil, the production cost of polyester filament yarn increases by approximately RMB 800-1,000 per ton. At the current $70 mark, compared to the $60 level at the beginning of this year, the raw material costs for chemical fiber enterprises have cumulatively increased by about 10%-15%.
It is worth noting that this increase occurred in early July, which is the transition period between the traditional slack and peak seasons for the textile industry. Typically, August-September is the stocking season for autumn/winter fabrics, and downstream weaving companies will purchase raw materials in advance. If crude oil prices remain above $70, polyester plants will likely pass on costs by raising ex-factory prices, while weaving companies face a dilemma between 'buying on rising prices' and 'excessive costs'.
Industrial Cluster Response and Inventory Game
Feedback from major chemical fiber industrial clusters indicates that polyester plants in Shengze, Changxing, Xiaoshan, and other areas are closely monitoring market movements. Some companies have begun to restrict preferential shipment discounts or even suspend large order quotations, waiting for further direction. This 'suspension and wait-and-see' behavior itself is a signal that the upstream expects stronger future prices.
However, the situation downstream is inconsistent. Currently, raw material inventory levels at weaving companies are generally maintained at 7-15 days, a moderately low level. On one hand, companies did not significantly restock when crude oil prices were low earlier; on the other hand, the slow recovery of final garment orders has kept weaving operating rates at only 65%-70%, far below the same period in previous years. This means that if crude oil prices continue to surge in the short term, downstream companies can only passively accept high-priced raw materials or reduce operating rates to minimize losses.
Impact on Exports and Procurement Strategies
For export-oriented companies focused on polyester fabrics, the cost pressure from rising crude oil prices will be reflected in export quotations within 1-2 months. If the RMB exchange rate remains stable during the same period, the price advantage of Chinese polyester fabrics will be further weakened. Southeast Asian competitors (such as Vietnam and India) also face rising crude oil costs, but their polyester raw materials are partially imported, making cost transmission more direct.
Historical experience shows that when crude oil prices operate in the $70-80 range, the textile chemical fiber industry typically experiences a round of 'cost-push' price increases. However, whether the increase can be fully transmitted to the end market depends on the acceptance level of demand. Currently, global textile and apparel consumption is still in the post-pandemic recovery phase, with high retail inventories in Europe and the US, limiting buyers' tolerance for price increases.