International crude oil futures plunged over 6% at the start of new trading on July 26, with PTA dropping more than 5% in a single day, prompting some polyester plants to cut filament yarn prices by 50-100 yuan per ton. The immediate trigger for this sharp decline was not a reversal in supply-demand fundamentals, but a shortage of U.S. military ammunition in the Middle East—according to public reports, President Trump paused the expansion of military strikes against Iran because the Pentagon's inventory of Patriot interceptor missiles was running low.
The transmission logic of this event along the textile supply chain deserves a closer look. On the surface, lower oil prices are positive: raw material cost pressures could ease. But upon closer inspection, the decline from $100 to the $90 range is limited, and polyester plants' pricing power does not fully track crude oil movements. The polyester filament yarn industry is operating at only 74.39% capacity, already low, yet downstream warping machine utilization in Jiangsu and Zhejiang is just 61.93%, and weaving utilization hovers around 50%. Production and sales are roughly balanced, giving polyester plants little destocking pressure and thus limited incentive for sustained price cuts.
Breakdown in Cost Transmission What truly troubles textile mills is the breakdown in the mechanism by which upstream costs are passed downstream. When crude falls, polyester plants can offer promotional discounts, but "promotion" is not the same as a "trend decline." Public industry data shows that unless oil enters a one-way bear market, polyester yarn prices are more likely to see short-term concessions rather than sustained corrections.
Meanwhile, dyeing costs are rising against the trend. Disperse black dye has risen twice in one month, with a cumulative increase of 5,000 yuan per ton. Some dyeing mills in Shaoxing have already issued price hike notices: from August 1, light and medium colors will rise by 100-300 yuan per ton, and dark colors by 300-500 yuan per ton. The logic for dyes and polyester yarn is strikingly similar—a few large players have strong pricing power within the industry, allowing them to effectively manage profits, while downstream weaving and dyeing mills have virtually no bargaining leverage and must passively accept any upstream price changes.
Geopolitics as the Wild Card The most uncertain factor for future crude oil prices remains geopolitics. The U.S. ammunition shortage does not mean it will abandon efforts to block the Strait of Hormuz—maintaining a blockade requires far fewer munitions than a full-scale strike. As long as oil tanker chokepoints are obstructed, oil prices will struggle to see a meaningful correction.
More critically, the trust built during previous rounds of U.S.-Iran negotiations has been destroyed. With the last memorandum of understanding torn up, restarting talks will require more time and diplomatic cost. In the short term, strait transit capacity will remain constrained. And Trump's own policy style—tough one day, backing down the next—makes oil price forecasting almost a gamble.