Crude oil prices have retreated from above $100 to the $90 range, PTA plunged over 5% in a single day, and some polyester filament yarn grades dropped by 50-100 yuan per ton. These figures might suggest an imminent easing of textile raw material costs, but the actual transmission along the chain is far from linear. Dye prices have risen twice within a month, accumulating a 5,000 yuan per ton increase, and dyeing mills in Shaoxing have announced August price hikes of 100-300 yuan for light colors and 300-500 yuan for dark shades. A clear disconnect has emerged between upstream oil volatility and downstream textile firms' actual procurement costs.
Pricing Power Imbalance: Broken Cost Transmission Under Oligopoly
The pricing logic of the polyester chain has shifted from 'cost-driven' to 'capacity concentration-driven.' The top few PTA and polyester filament yarn producers control over 60% of total capacity, granting them strong price control. Even when crude oil declines, these large mills prefer to maintain profit margins through production cuts or promotional sales rather than aggressive price reductions. Current domestic polyester filament yarn operating rates stand at only 74.39%, below historical averages, indicating active supply tightening. Downstream in Jiangsu and Zhejiang, texturing machine utilization is 61.93%, weaving utilization is around 50%, and production-sales balance is largely flat, giving polyester mills no destocking pressure and thus little incentive to cut prices.
Pricing power in the dye segment is even more concentrated. Disperse black dye has risen twice in a month, totaling 5,000 yuan per ton, far outpacing the concurrent crude oil decline. Dye producers' pricing strategies are largely immune to oil volatility, driven instead by their own capacity allocation and profit targets. This means even if crude continues to fall, dye prices are unlikely to follow suit; instead, large mills may accelerate price hikes to maintain margins.
Downstream Squeeze: Production Cuts as the Only Option
For weaving and dyeing firms, raw material price fluctuations are no longer the core issue—basic fabric costs have become inverted. At current polyester filament and dye prices, most conventional fabrics cost more to produce than their market selling price, meaning every meter woven incurs a loss. In this scenario, whether raw materials rise 50 yuan or fall 100 yuan makes little marginal difference to the bottom line.
More critically, downstream firms lack bargaining power. Weaving mills passively accept promotional prices from polyester factories; dyeing mills can only partially pass on dye cost increases through fee hikes, which are often delayed and insufficient. The Shaoxing dyeing mill's August notice shows dark color fee increases of only 300-500 yuan per ton, while disperse black dye has already surged 5,000 yuan per ton—dyeing mills themselves are under pressure.
Consequently, more weaving enterprises are opting for production cuts or shutdowns. In the off-season with cost inversion, it makes more sense to halt operations than to run at a loss. This 'buying time' strategy essentially pushes survival pressure into the future, waiting for upstream prices to ease or end-demand to recover. The problem is that upstream pricing power is unlikely to loosen in the short term, and terminal orders remain weak amid slowing U.S. and European economies.
Crude Oil Uncertainty: A Choppy Outlook
Crude oil prices are likely to remain volatile rather than trend downward. Three factors support this: First, although the U.S. has paused expanding military strikes on Iran due to air defense missile inventory shortages, maintaining a Strait blockade requires far fewer munitions than full-scale combat, so constrained transit through the Strait of Hormuz will persist. Second, the remaining trust between the U.S. and Iran has been exhausted, making new negotiations lengthy and keeping transit efficiency low. Third, Trump's erratic policy style—tough one day, conciliatory the next—prevents markets from forming stable expectations.
This means crude oil is likely to oscillate in the $90-100 range rather than experience sustained deep declines. For the polyester chain, this implies raw material costs will remain elevated for an extended period, unable to relieve downstream pressure through oil price drops.