Crude oil prices retreated from the $100 mark, sending PTA down over 5% in a single day, and some polyester plants took the opportunity to cut filament yarn prices by 50 to 100 yuan per ton. This price easing appears to stem from a temporary de-escalation in US-Iran tensions—the US military, facing a shortage of air defense interceptor missiles, has delayed expanding strikes against Iran, briefly calming market anxiety. But interpreting this as a turning point for textile raw material costs may be overly optimistic.
The Deep Logic of Cost Transmission
The transmission of lower oil prices to the polyester chain is far from linear. Polyester filament yarn prices depend more on polyester plants' inventory and profit control capabilities than on instantaneous crude oil fluctuations. Currently, domestic direct-spun polyester filament operating rates stand at only 74.39%, indicating a relatively tight supply. Meanwhile, downstream warping machine utilization in Jiangsu and Zhejiang provinces is merely 61.93%, and weaving rates hover around 50%. Supply and demand are roughly balanced, giving polyester plants little incentive to slash prices to reduce inventory. This means the pattern of raw material prices being prone to rises rather than falls has not yet changed.
In contrast to polyester filament, dye costs have surged sharply. Disperse black dye has been raised twice within a month, accumulating a 5,000 yuan per ton increase. Dyeing mills in Shaoxing have already issued price hike notices effective August 1, with light-to-medium shades up 100 to 300 yuan per ton and dark shades up 300 to 500 yuan per ton. The common thread between the dye and polyester filament industries is that leading companies hold strong pricing power and can effectively control prices and profits, while downstream weaving and dyeing mills have no choice but to passively accept them.
Expectations of Repeated Oil Price Volatility
Over the medium to long term, the probability of a single-direction trend in international oil prices is low; a volatile, range-bound pattern is more likely. Although the US has delayed military strikes against Iran due to ammunition shortages, the Strait of Hormuz's shipping capacity remains practically constrained—maintaining a blockade of the strait requires only limited munitions, and as long as oil tanker chokepoints are blocked, oil prices will find it difficult to correct significantly. Moreover, the memorandum of understanding that took months of negotiation between the US and Iran has been torn up, with the remaining trust exhausted. A new round of talks will require even more time to yield results, during which strait shipping capacity will remain severely restricted. The Trump administration's erratic decision-making adds further uncertainty to oil price direction.
Passive Responses from Downstream Firms
For weaving enterprises, the costs of many basic fabrics have already been inverted. In the face of cost inversion, the magnitude of raw material price fluctuations has become almost irrelevant; what matters more is whether cash flow can sustain the slack season. An increasing number of weaving mills are opting for production cuts or even temporary closures, trying to buy time and hope for a market rebalance. While this defensive strategy may temporarily ease inventory pressure, it also suggests that the industry's capacity shakeout process could be longer than expected.