Brent crude broke through $85 per barrel on July 16, with WTI also touching $80. For the textile industry, this is not just energy price volatility but a signal for repricing the entire chemical fiber cost chain.
Cost Transmission Logic
Each $1/bbl rise in crude adds roughly $3-4/ton to PX production costs. PTA, as the direct downstream of PX, sees its processing cost closely linked to PX prices. At the current Brent $85/bbl, PTA production costs have risen by about RMB 120-150/ton since early July. Polyester filament (POY, FDY, DTY) has raw material costs accounting for over 70% of total, meaning polyester plants' margins are being rapidly eroded by the oil rally.
Industry data shows East China PTA spot prices climbed from RMB 5,850/ton at month-start to around RMB 5,980/ton by mid-July, a gain of 2.2%. Polyester POY 150D/48F offers have been raised to RMB 7,800-7,900/ton, up RMB 150/ton from last week. This cost-push inflation is spreading from polyester to weaving.
Divergent Industrial Belt Reactions
Weaving mills in Shengze, Changxing, and Xiaoshan face a dilemma: accept higher raw material costs and pass them on, risking order loss, or absorb costs and see margins approach breakeven. Fabric traders at Keqiao Light Textile City report increased inquiries for greige goods but limited actual transactions, as downstream brands and garment factories resist price hikes.
Notably, this oil rally coincides with the traditional off-season (July-August) when end-order demand is weak. Polyester plant inventories had already risen from 15 days in late June to 18-20 days. Surging oil may force polyester plants into 'production cuts to support prices,' which would tighten greige goods supply and create a temporary supply-demand mismatch.