Brent crude oil broke through the $85 per barrel mark on July 16, with WTI crude also recovering to around $80 per barrel. For the textile industry, this price level signals another systemic increase in chemical fiber production costs. Crude oil is the starting point of the polyester chain, and its price changes cascade through PTA, ethylene glycol, polyester chips, polyester filament, and staple fiber, ultimately affecting the entire textile supply chain procurement costs.
Cost Transmission: From Oil to Chemical Fiber Price Chain
Crude oil prices experienced significant intraday volatility. WTI crude fell from an early morning $79.5 per barrel to $78.92 per barrel, a decline of over 1%, but then rebounded strongly to close above $80 per barrel. Brent crude, after dipping below $84 per barrel in the afternoon, rallied to above $85 per barrel by evening. This intraday V-shaped reversal reflects a strengthening market expectation of supply-side tightening.
For the textile industry, each $1 per barrel increase in crude oil raises the production cost of polyester raw material PTA by approximately 30-40 yuan per ton. At the current Brent price of $85 per barrel, this represents an increase of about 13% from the beginning of the year's level of around $75 per barrel. This means chemical fiber companies face direct pressure from rising raw material costs, which is being transmitted downstream.
Industry Impact: Chemical Fiber Companies Under Pressure, Downstream Procurement Strategies Shift
Polyester filament and staple fiber are the most widely used chemical fiber varieties in the textile industry. When crude oil prices break above $85 per barrel, the cost line for polyester chip production is effectively raised. Industry public data shows that polyester chip prices have already risen by about 200-300 yuan per ton compared to last month. For chemical fiber producers, this means narrowing profit margins; for downstream weaving and garment factories, it means increased procurement costs.
Enterprises in textile clusters like Shengze and Keqiao report a noticeable acceleration in recent inquiries and order placements for chemical fiber raw materials, with some companies starting to stock up early to lock in current prices. However, the recovery in end-market demand for apparel remains fragile, limiting downstream companies' acceptance of price increases. This conflicting situation of 'rising costs, weak demand' is squeezing profits across the entire textile supply chain.
Regional Market Reactions: Divergent Procurement Strategies in Industrial Clusters
From a regional perspective, different industrial clusters show varying responses to the crude oil price hike. Weaving enterprises in the Shengze area, which primarily use polyester filament as raw material, are more sensitive to crude oil prices. Some have begun adjusting their procurement plans, extending their normal inventory cycle from 7 days to 10-15 days to prepare for potential price increases. Enterprises in the Keqiao area are more focused on the pricing flexibility of end-fabric orders, with most still adopting a demand-based procurement approach to avoid excessive stockpiling.
The raw material structure of the Nantong home textile cluster has a relatively lower proportion of polyester, but the crude oil price increase still has indirect effects through channels like packaging materials and transportation costs. Overall, crude oil breaking above $85 per barrel is prompting textile enterprises to reassess their raw material inventory strategies and cost control measures.