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, dropping 6.25% in a single day. This was one of the sharpest oil price swings in the past month. Yet surprisingly, such a massive upstream fluctuation only triggered a mild adjustment in polyester filament prices, which remained nearly flat. This divergence is reshaping the bargaining logic along the textile supply chain.
Event Background
The direct trigger for the oil price slump was a reversal in geopolitical expectations. On July 31, signals emerged about a possible strike on Iranian energy facilities, quickly heightening market anxiety. But just two days later, news of upcoming negotiations with Iran flipped the sentiment, sending crude prices sharply lower. This cycle of threat-and-retreat has repeated several times in recent months, yet speculative capital continues to react, keeping oil prices in a wide range rather than a clear trend.
The key point is that the violent oil swings have not produced equivalent ripples in the polyester chain. Since the previous US-Iran conflict, polyester filament prices have maintained a modest daily change of 50-100 yuan per ton. Even when crude fell 7% in a day, filament only followed with a symbolic decline. This indicates that pricing power for filament has shifted from cost-side to supply-demand dynamics, and the marginal impact of upstream raw materials is weakening.
Industry Impact
The independent movement of polyester filament is underpinned by extremely low operating rates at the downstream weaving sector. Currently in the traditional off-season, the average loom operating rate is below 50%. Many enterprises lacking stable orders have already cut production or even halted lines. Under such circumstances, weaving mills are mostly purchasing raw materials on a just-in-time basis, buying only for immediate needs. They are insensitive to daily fluctuations of a few dozen yuan. This mentality of "not buying on dips, buying small on rallies" further dulls the transmission of cost changes.
However, time may be the biggest variable. On one hand, shipping disruptions in the Strait of Hormuz and the Bab el-Mandeb Strait have raised transport costs significantly, even for oil that gets through, which will exacerbate energy shortages in some countries and support oil prices in the medium term. On the other hand, the massive output cuts in the weaving sector during the first half of this year have reduced average grey fabric inventories to more than 10 days lower than the same period last year. This means that once downstream demand recovers, existing inventories may not be sufficient to withstand the first wave of purchasing. In that scenario, grey fabric prices could rebound first and then transmit upward to polyester filament.
For buyers, the current strategy of low-price just-in-time restocking is prudent, but they should be wary of a potential turning point in late August. For upstream polyester plants, destocking through off-season production cuts is building leverage for the next round of price negotiations.