Crude oil futures fell sharply after briefly surpassing $100 per barrel, with a single-day drop exceeding 6%. This volatility quickly transmitted to the chemical fiber market: PTA plunged over 5% in one day, and some polyester plants subsequently cut filament yarn prices by 50-100 RMB/ton. On the surface, this appears to be a short-term correction driven by shifting geopolitical expectations. However, a deeper look into the industrial chain reveals that price signals are far from linear.
Geopolitical Easing, but Supply Risks Remain
The trigger was the U.S. military's decision to postpone expanded strikes against Iran. According to public sources, the Pentagon's concerns over escalating conflict and depleted air defense missile inventories led to restraint, temporarily easing market tensions. However, this narrative of 'ammunition shortage' does not equate to a genuine resolution of crude supply pressures. The ability to navigate the Strait of Hormuz remains the key variable: maintaining a blockade requires far fewer military resources than a large-scale strike, and as long as oil tanker chokepoints are threatened, oil prices are unlikely to trend downward. Moreover, the previous Memorandum of Understanding between the U.S. and Iran has been torn up, leaving minimal trust for new negotiations in the near term. The Trump administration's erratic decision-making adds further uncertainty to oil price trajectories.
Polyester Plants' Pricing Logic: Not a Simple Pass-Through
The oil price drop did not prompt immediate, broad-based cuts from polyester plants. Domestic polyester filament yarn operating rates stand at about 74.39%, relatively low. Downstream, integrated texturing machine utilization in Jiangsu and Zhejiang is 61.93%, while weaving rates hover around 50%. Production and sales are roughly balanced, giving polyester plants little destocking pressure and thus limited incentive to lower prices. More importantly, polyester yarn prices do not strictly follow crude oil—industry concentration is high, and major producers have strong control over pricing and margins. This means that even if crude sees a temporary correction, polyester prices may only dip through short-term promotions rather than entering a sustained downtrend.
Dye Costs: Another Tightening Chain
Compared to polyester yarn, dye prices have shown more rigid upward momentum. Disperse black dye has been raised twice in one month, accumulating a 5,000 RMB/ton increase. Dyeing mills in Shaoxing have issued price hike notices effective August 1: light-to-medium shades up by 100-300 RMB/ton, and dark shades up by 300-500 RMB/ton. The logic mirrors that of polyester—upstream suppliers hold pricing power, while downstream dyeing and weaving mills have little choice but to accept. This round of processing fee increases will further lift fabric production costs, with a longer lag before reaching brands and consumers.
Weaving Mills: Reducing Output to Buy Time
For weaving mills, the situation is already severe. Costs for many basic fabrics have long been inverted, and marginal changes in raw material prices have diminishing impact. During the traditional off-season, compounded by high costs, a growing number of mills are choosing to cut production or even shut down temporarily, hoping to weather the trough by compressing capacity. This 'buying time with downtime' strategy essentially waits for upstream costs to fall or downstream demand to recover. Yet, given current pricing power dynamics and inventory structures across the chain, a clear turning point is unlikely in the near term.