Crude oil prices posted a steep upward curve on July 13. WTI crude started from $73/barrel, broke through $74 and $75 intraday, eventually closing up 5.01%; Brent crude rose 5.00% simultaneously, approaching $80/barrel. The direct trigger was an escalation of geopolitical risk in the Middle East: Iran announced the closure of the Strait of Hormuz, the U.S. launched military strikes, and the Trump administration reinstated sanctions on Iran.
Cost Transmission Mechanism Is Kicking In
Crude oil is the pricing anchor for the textile chemical fiber chain. From naphtha to PX, PTA, polyester chips, and polyester filament, every link's cost is highly correlated with oil prices. Industry data shows that for every $10/barrel rise in crude, PTA's theoretical cost line moves up by approximately 600-800 RMB/ton. Based on this week's $5/barrel WTI gain, PTA faces a short-term upward pressure of 300-400 RMB/ton.
Polyester filament, the most widely used chemical fiber in downstream weaving, is particularly sensitive to oil price spikes. In the first half of 2025, average polyester filament prices ranged between 7,200-7,500 RMB/ton, with operating rates around 80%. Once oil stabilizes above $75/barrel, filament makers will likely activate weekly price adjustment mechanisms to pass cost increases to weaving mills.
Downstream Affordability Is the Key Variable
The current textile end-market shows no strong signals. Since June, gray fabric inventory days in major markets like Shengze and Keqiao have typically been 30-35 days, above historical averages. Orders are mostly short-run and small-lot, with little restocking appetite. This means weaving mills have limited ability to absorb raw material price hikes. If polyester filament prices rise too fast, mills may reduce operating rates and consume existing stocks to hedge.
This upstream-downstream tug-of-war creates a typical pattern: raw material prices rise, but gray fabric prices struggle to follow. For integrated chemical fiber leaders (e.g., Tongkun, Hengli) with captive polyester capacity, oil price increases can actually expand their PTA-polyester filament margin. But for small- and medium-sized weaving mills relying on external filament purchases, each ton of cost increases by several hundred RMB, while end customers are unlikely to accept equivalent price hikes.
New Variables for Export Orders
The RMB exchange rate often comes under pressure simultaneously with oil price shocks. If sustained high oil prices push up imported energy costs, the RMB may weaken against the USD, which is positive for textile exporters invoicing in dollars—the same quote yields more RMB upon settlement. However, overseas buyers tend to delay orders or push down FOB prices when raw material costs are high, leading to lower actual transaction unit prices rather than higher ones.
An export manager from Nantong's home textile cluster recently revealed that Middle Eastern clients have started requesting renegotiation of signed contracts for polyester-cotton blended fabrics, citing "uncontrollable raw material costs." If this sentiment spreads, Q3 textile export order signing may slow.