Oil price volatility has sent shockwaves through the polyester feedstock market. International crude futures quickly retreated after hitting $100 per barrel, and PTA prices plunged over 5% in a single day. Some polyester filament producers followed by cutting prices by 50-100 CNY per ton for certain specifications. This adjustment appears to be a direct response to falling crude, but the underlying supply chain logic is far more complex.
Background
The US-Iran military standoff took a dramatic turn. Citing informed sources, Xinhua reported that President Trump postponed expanding military strikes against Iran due to depleted air defense interceptor stockpiles at the Pentagon. This eased fears of an escalation in the Middle East, sending oil prices sliding from $100 to around $90 per barrel.
However, lower oil prices do not immediately translate into cheaper polyester feedstock. Historical patterns show that unless crude enters a sustained downtrend, polyester filament prices tend to be adjusted through short-term promotions rather than a structural decline. Public data shows that domestic polyester filament operating rates stand at 74.39%, with overall capacity utilization not particularly high, giving major polyester producers strong pricing power.
Dye markets show even greater rigidity. Disperse black dye has seen two price hikes within a month, totaling 5,000 CNY per ton. Dyeing mills in Shaoxing have issued August price increase notices: light-to-medium colors up 100-300 CNY/ton, dark colors up 300-500 CNY/ton. The logic is similar to polyester—upstream players dominate pricing, leaving downstream weavers and dyers with little bargaining power.
Industry Impact
Downstream weaving mills face unprecedented cost pressure. Public data from the National Bureau of Statistics shows that the comprehensive operating rate of texturing machines in Jiangsu and Zhejiang is only 61.93%, with weaving rates hovering around 50%. This means a large amount of capacity is idle, and production and sales are roughly balanced. Polyester mills have no inventory pressure and thus little incentive to cut prices.
For textile enterprises, the production cost of many basic fabrics has already inverted. Raw material prices are prone to rise but slow to fall, and dyeing costs continue to climb, while finished product prices cannot be passed on smoothly. Under such conditions, more and more weaving mills are choosing to cut production or even take holidays, hoping to buy time until the market rebalances.
Looking ahead, it is unlikely that international oil prices will enter a single-direction trend. Instead, they are expected to remain in a volatile range for three reasons:
- Although the US has limited ammunition, blockading the strait requires far fewer munitions. As long as oil tanker exits are blocked, oil prices will struggle to retreat significantly.
- Trust between the US and Iran has been severely depleted, and a new round of negotiations will take time. During that period, strait shipping capacity will remain constrained.
- Trump's policy style is erratic, alternating between toughness and retreat, adding uncertainty to future crude trends.