On the morning of August 3, Brent crude for October delivery plunged as much as 7.3% to $81.55 per barrel, while WTI fell below the $80 mark. Yet, amid this violent upstream volatility, polyester filament prices only edged down by 50-100 yuan per ton, and at times remained unchanged. This apparent decoupling is reshaping the pricing logic of the textile upstream sector.
Event Background
The immediate trigger for this oil price swing was the recurring US-Iran tension. On July 31, the US hinted at a possible strike on Iranian energy facilities, but just two days later, it claimed that negotiations would be held with Iran over the Strait of Hormuz and other issues. The oil market reacted swiftly to such verbal interventions, pricing in the headlines and causing sharp price movements.
Notably, this is not the first time that US-Iran conflicts have caused oil price spikes. Since late February, similar scenarios have unfolded multiple times, yet each spike has failed to drive polyester filament into a synchronized move. In fact, from the end of the previous conflict to the current one, polyester prices have remained in a narrow range, showing strong resistance to volatility.
This resilience is rooted in the real demand conditions downstream. According to industry data, the current off-season has pushed weaving machine operating rates below 50%, with many mills lacking stable orders and having reduced or halted production. In this context, polyester purchases are strictly for rigid demand replenishment, insensitive to daily fluctuations of 50-100 yuan. In other words, small price adjustments are insufficient to alter downstream buying rhythms.
Industrial Impact
The decoupling of polyester from crude oil is not merely a symptom of weak demand; it reflects a shift in the profit transmission mechanism along the supply chain. Previously, oil prices were the core anchor for polyester pricing. But now, under a buyer's market, downstream acceptance has become a more important pricing variable. When upstream costs rise, polyester mills cannot fully pass them through; when upstream prices fall, they are reluctant to concede, as profit margins are already squeezed.
This has locked polyester prices into a stalemate of "cannot rise, cannot fall deeply." For weaving mills, this means greater predictability in raw material costs and reduced short-term procurement risk. However, the risk has not disappeared; it has shifted to inventory. Industry statistics show that due to large-scale production cuts in the first half of the year, average grey fabric inventories have fallen by more than 10 days compared to the same period last year. This figure may seem modest, but it could act as a trigger for market reversal.
Once downstream demand recovers, low inventories will amplify price elasticity. Grey fabric prices often rise not when inventories are depleted, but when the market senses a tightening signal, prompting sellers to hold back goods and lift prices ahead of time. At that point, if oil remains volatile at high levels, polyester prices could be pulled upward by demand, creating a resonance of cost and demand pressures.
Time is the most critical variable. Based on historical patterns, the off-season will last about half a month more, during which demand is unlikely to improve significantly. Meanwhile, the risk of blockades in the Strait of Hormuz and the Bab el-Mandeb Strait has raised shipping costs and created supply shortages in some countries. If geopolitical risks persist, oil price centers may shift higher, which could combine with a potential demand recovery in late August to create a compounding effect.