Oil at $82 per barrel has once again tightened the cost nerves of the textile chemical fiber sector. Crude is the source of PTA, MEG and other chemical fiber raw materials, and every dollar movement in oil prices transmits downstream along the chain. For textile enterprises at the seasonal transition between slack and peak demand, this oil price rally deserves a closer look.
Event Background
During Asian trading on August 17, WTI crude opened higher at $81.66 per barrel and quickly touched $82, up 0.59% on the day. The level is not far from the July high, indicating that international oil prices remain in a high-level fluctuation channel. For the textile industry, oil is not just an energy cost but also the anchor for chemical fiber raw material pricing.
Higher crude directly lifts naphtha and PX costs, which then transmit to PTA and MEG. Currently, PTA processing margins have been squeezed to relatively low levels. If oil continues to strengthen, PTA plants will show a stronger willingness to support prices. For MEG, the oil-based route becomes more expensive, while the coal-based route gains a temporary comparative advantage, but this does not mean overall supply will loosen.
Historically, for every month oil stays above $80, the center of chemical fiber raw material prices tends to move up 3%-5%. However, this time is slightly different—downstream demand recovery is weak, and the acceptance of price increases for greige fabrics and finished fabrics is limited, so cost pass-through is not smooth.
Industry Impact
For polyester plants, the oil price rise is a double-edged sword. On one hand, higher raw material costs provide a reason to raise product prices. On the other hand, if downstream weaving mills resist price hikes, polyester plants must absorb part of the cost pressure, testing their cash flow. Recently, the sales-to-output ratio of polyester filament has remained at 60%-80%, with inventory days accumulating, indicating cautious terminal purchasing.
The weaving segment feels the impact more directly. In Jiangsu and Zhejiang, for example, the operating rate of water-jet looms is around 70%, with orders mainly small and just-in-time, and large orders are scarce. Fabric price transmission lags behind raw material increases, further squeezing weaving mills' profit margins. Some companies have begun adjusting product mixes, reducing conventional varieties and shifting towards differentiated, high-value-added fabrics.
Foreign trade enterprises face a more complex situation. Fluctuations in the RMB exchange rate and high shipping costs have already pressured export order profits. After oil prices pushed up chemical fiber raw material costs, overseas clients are generally cautious about price increase letters, with more contract renegotiations and delayed orders. For orders with locked forward prices, dual fluctuations in exchange rates and raw material costs make quoting significantly more difficult.
Practical Recommendations
Facing high oil price volatility, all links in the chain need to reassess procurement strategies and pricing mechanisms. Proactive planning and flexible adjustment are better than passive following to protect profit margins.