On July 16, WTI crude oil fell below $79 per barrel during intraday trading, with a daily decline of 1% to settle at $78.92 per barrel. Brent crude also dropped below $84, down 0.81% for the day. This price movement is not an isolated event but part of a broader repricing of demand expectations in the energy market. For the textile industry, every sharp fluctuation in crude oil triggers a chain reaction in chemical fiber raw materials—the cost support for PTA, ethylene glycol, polyester filament, and other varieties is weakening.
Cost Transmission Logic
Crude oil is the source of the textile chemical fiber supply chain. Naphtha from refining is converted into PX (paraxylene), then PTA (purified terephthalic acid), and finally polyester filament and staple fiber. The pricing of the entire chain is highly dependent on crude oil prices. At the current WTI price of $78.92 per barrel, about 60% of PTA production costs come from PX raw material costs, which are directly linked to naphtha cracking margins. Industry data shows that for every $5 per barrel drop in crude oil, the theoretical cost of PTA can decrease by approximately 200-300 yuan per ton.
This means that if oil prices remain below $79, the psychological purchasing price of downstream polyester plants will adjust downward simultaneously. Currently, the spot price of POY (pre-oriented yarn) has been at a near six-month low. Further cost reduction may accelerate the destocking process across the chain. For weaving mills, lower raw material costs are a short-term benefit, but if oil prices remain depressed, the price negotiation space for gray fabrics and finished fabrics will also open up.
Industrial Cluster Reactions and Inventory Game
From a regional perspective, chemical fiber clusters in Xiaoshan and Shaoxing (Zhejiang), and Shengze and Wujiang (Jiangsu) are already feeling the pressure. Some polyester plants began to slightly reduce polyester yarn prices in mid-July, with adjustments ranging from 50 to 100 yuan per ton. This reflects factories' immediate reaction to the oil price decline—clearing spot goods before inventory depreciates. However, downstream weaving mills are not rushing to buy, instead adopting a "buy-as-needed" strategy, waiting for clearer bottom signals.
This wait-and-see sentiment is also evident in the gray fabric market. A medium-sized weaving mill in Shengze told industry media that its current raw material inventory is maintained at about one week, far lower than the two-week level in the same period last year. "Oil prices are unstable; we dare not stockpile for fear of cost inversion." This cautious attitude is spreading throughout the entire chain. From PX to PTA to polyester, operating rates in each segment have shown slight declines in early July, with some plant maintenance schedules brought forward to hedge against inventory losses from falling raw material prices.
Impact on Foreign Trade and Exchange Rate
The impact of falling oil prices on textile foreign trade is more complex. On one hand, lower chemical fiber raw material costs help export companies maintain competitive pricing. On the other hand, the time lag between RMB exchange rate fluctuations and the pricing cycle of overseas orders creates challenges. Typically, the price lock-in period for foreign trade orders is 30-60 days. If crude oil continues to fall during this period, the profit margin of already-accepted orders may be squeezed—because customers will demand price reductions based on the latest raw material costs.
For export companies focusing on polyester fabrics and chemical fiber yarns, the most prudent strategy is to shorten the validity period of quotes and include crude oil price fluctuation clauses in contracts. Industry data shows that in 2025, Southeast Asia and the Middle East accounted for over 40% of China's chemical fiber fabric exports. These markets are highly price-sensitive. Once crude oil costs decline, overseas buyers may request renegotiation, and export companies need to prepare cost calculation models in advance.