Crude oil prices retreated from above $100 to the $90 range, PTA plunged over 5% in a single day, and some polyester filament specifications dropped by 50-100 yuan per ton. These figures initially suggest a loosening of raw material costs, but a deeper look into the industrial chain reveals that upstream control remains strong despite the oil price correction.
Pricing Logic at the Raw Material End
Polyester filament prices do not simply follow crude oil. Current domestic polyester filament operating rates are at 74.39%, with polyester factories not running at full capacity. Downstream in Jiangsu and Zhejiang, the combined operating rate of texturing machines is 61.93%, while weaving rates are around 50%. Production and sales are basically balanced, with no significant inventory pressure. This means polyester factories have no incentive to cut prices proactively; short-term promotions are tactical responses to oil price fluctuations, not a trend reversal.
The dye market is even more tightly controlled. Disperse black dye saw two consecutive price increases within a month, totaling 5,000 yuan per ton. Dyeing factories in Shaoxing followed with price hike notices: light to medium colors up by 100-300 yuan per ton, and dark colors up by 300-500 yuan per ton, effective August 1. Both dyes and polyester filament share a common characteristic: high industry concentration, with a few large factories holding pricing power, leaving downstream weaving and dyeing firms with no choice but to accept.
Geopolitics and Oil’s Repeated Tug-of-War
The easing of US-Iran tensions is the direct trigger for this oil price correction. The US military’s shortage of air defense ammunition led to a pause in expanding strikes, temporarily easing market anxiety. However, oil prices are more likely to oscillate than trend downward.
- The ammunition shortage mainly affects active strike capabilities; maintaining a strait blockade requires far fewer munitions. As long as oil tanker chokepoints remain constrained, oil prices have support.
- Mutual trust between the US and Iran has been exhausted, and new negotiations will take longer, during which strait shipping capacity will remain limited.
- Trump’s erratic decision-making style adds uncertainty to oil price direction.
For textile companies, this means raw material costs will not significantly improve from a one-time oil price drop, and they will continue to face fluctuating risks.
Downstream Passivity and Self-Rescue
Basic fabric costs are already inverted, and whether raw material prices rise or fall makes little difference to weaving firms. The core issue is that weaving and dyeing stages lack pricing power and cannot pass cost pressure down to garment brands.
More weaving firms are now opting for production cuts and holidays, aiming to buy time. This strategy essentially reduces losses by lowering operating rates under the dual pressure of insufficient orders and high costs, waiting for a substantive improvement in market supply-demand dynamics. But this also means the industry is undergoing a passive capacity reduction, with cash flow pressures particularly acute for small and medium enterprises.