Crude oil prices have fallen below $90 per barrel, and PTA dropped 5% in a single day, with some polyester filament yarn prices down by 50 to 100 yuan per ton. While this may seem like good news, it masks a structural contradiction in cost transmission within the textile industry. The temporary easing of upstream raw material prices has not provided relief for downstream weaving and dyeing enterprises.
Asymmetric cost transmission
When international oil prices retreated from $100 to around $90 per barrel, the polyester chain reacted quickly: PTA futures fell 5% in one day, and some polyester filament yarn prices were reduced by 50 to 100 yuan per ton. However, this decline has not effectively passed through to the end fabric sector. The core reason lies in the high concentration of capacity in the upstream—PTA and polyester chip—where a few leading companies control pricing. With operating rates at only 74.39%, polyester plants face no major destocking pressure, making price cuts a short-term promotional tactic rather than a trend reversal.
More damaging is the surge in dye prices. Disperse black dye has risen twice in one month, accumulating a total increase of 5,000 yuan per ton. Dyeing mills in Shaoxing have issued price hike notices: light and medium colors up by 100 to 300 yuan per ton, and dark colors up by 300 to 500 yuan per ton. The dye industry, like polyester, is dominated by a few suppliers, leaving downstream buyers with no bargaining power.
Geopolitics and oil price volatility
The US decision to postpone expanding military strikes against Iran is the direct trigger for this oil price correction. According to informed sources, the Pentagon's stockpile of air defense interceptor missiles in the Middle East is running low, limiting military options. But this factor's suppressive effect on oil prices may not last long.
From three perspectives, oil prices are more likely to remain volatile rather than trend downward:
- Even with limited ammunition, the US can still maintain blockades of key straits, limiting tanker traffic and supporting prices.
- The memorandum of understanding reached after months of negotiations between the US and Iran has been torn up, severely damaging trust. Reaching a new agreement will take longer, during which strait shipping capacity will remain constrained.
- The Trump administration's policy is erratic; today's retreat could become tomorrow's toughness, making price direction unpredictable.
Passive response from downstream
The asymmetry between upstream cost increases and decreases is the biggest challenge for textile enterprises. When polyester yarn rises, companies have no bargaining power; when it falls, the decline is insufficient to offset previous losses. Meanwhile, rising prices of auxiliary materials like dyes further squeeze profit margins.
In the Jiangsu-Zhejiang region, the comprehensive operating rate of texturing machines is only 61.93%, and weaving operating rates hover around 50%. Amid weak off-season demand, more weaving enterprises are choosing to cut production or take holidays, hoping to trade time for space. For basic fabrics already at cost inversion, small fluctuations in raw material prices have lost practical significance—the loss margin has not narrowed significantly due to raw material price drops.