When international oil prices briefly stayed above $100 per barrel and then suddenly turned around, PTA plunged 5% in a single day, and polyester filament yarn prices quickly followed with reductions of 50 to 100 yuan per ton. This chain reaction, seemingly triggered by a temporary easing of geopolitical tensions, actually reveals a deeper structural contradiction in the textile raw material market—the absolute pricing power of upstream giants versus the near-zero bargaining power of downstream weaving mills.
Short-Term Effects of Geopolitical Shocks
Last week, international crude oil futures fell more than 6%, dropping from $100 to around $90 per barrel. The trigger was U.S. President Donald Trump's decision to postpone expanding military strikes against Iran, citing the Pentagon's depleted inventory of air defense interceptor missiles. This news eased market fears of an escalation in the Middle East conflict, and oil prices fell accordingly.
However, it is crucial to recognize that this decline is highly speculative and short-lived. The probability of a sustained one-way drop in oil prices is extremely low; instead, the market is more likely to enter a range of repeated volatility. There are three reasons: First, even if the U.S. military is short on ammunition, blockading key waterways like the Strait of Hormuz does not require a large number of interceptor missiles, and once oil tanker exits are blocked, oil prices will rebound quickly. Second, the memorandum of understanding between the U.S. and Iran has been torn up, and trust between the two sides is completely gone; a new agreement in the short term is nearly impossible, and shipping capacity through critical straits will remain constrained during negotiations. Third, Trump's policy style is unpredictable, with toughness and retreat likely alternating, adding great uncertainty to oil price trends.
Structural Dilemma of Raw Material Costs
While the drop in crude oil reduces the expected cost of polyester raw materials, the reality is that polyester filament yarn prices are unlikely to experience a sustained decline. Currently, the operating rate of domestic polyester filament yarn is only 74.39%, which is not high; meanwhile, the comprehensive operating rate of texturing machines in the Jiangsu-Zhejiang region is 61.93%, and the weaving operating rate is around 50%. Production and sales are basically balanced, polyester factories have no significant destocking pressure, and therefore lack the incentive to cut prices. The essence is that a few large polyester companies hold absolute pricing power in the industry and can effectively control prices and profits.
More noteworthy is the dye side. Disperse black dye has been raised twice in one month, with a cumulative increase of 5,000 yuan per ton. Dyeing factories in Shaoxing have already issued price increase notices, effective August 1, with light and medium colors rising by 100 to 300 yuan per ton and dark colors rising by 300 to 500 yuan per ton. The logic for dyes and polyester filament is the same—upstream leading enterprises dominate pricing, while downstream weaving and dyeing factories can only passively accept it.
Downstream Helplessness and Response
For textile enterprises, the costs of many basic fabrics have already been inverted. The magnitude of raw material price fluctuations makes little difference to weaving mills—if prices rise, they lose more; if prices fall, they may not necessarily profit. In this context, more and more weaving enterprises are choosing to reduce production or even take holidays, attempting to trade time for space.
This strategy may seem passive, but it is actually a rational choice during the off-season. By not accepting loss-making orders and reducing continuous cash flow consumption, they wait for a rebalancing of market supply and demand. However, it must be pointed out that the premise of trading time for space is that upstream raw material prices can truly fall, and currently, this premise is not solid.