On August 28, WTI crude oil briefly fell below $82 per barrel, with an intraday decline exceeding 1%, while Brent weakened to $87.38. For the textile industry, this marks the third cost-side stress test this year triggered by volatile oil prices. Unlike previous occasions, this decline has not sparked a buying spree for raw materials; instead, it has left chemical fiber enterprises in a dilemma over inventory management.
Background
On the day, WTI crude was reported at $83 per barrel at 13:34, then continued to slide, with losses widening to 1% at 14:48 to $82.11. A slight rebound to $82.43 occurred at 15:12, but by 16:37 it fell again to $81.9, and Brent dropped 1% as well. Such intraday fluctuations reflect growing divergence in market views on supply and demand.
Oil serves as the source of the polyester industry chain. Its price fluctuations transmit through naphtha, PX, and PTA to textile raw materials like polyester filament and staple fiber. According to industry experience, a $1 drop in oil reduces PTA production costs by about 30-40 yuan per ton, and polyester staple fiber costs by 50-60 yuan per ton. This implies that the current $2 drop could lower polyester staple fiber costs by 100-120 yuan per ton.
However, chemical fiber companies have not gained profit margins from this. Downstream weaving enterprises show weak purchasing willingness, and gray fabric inventories remain high, causing polyester filament and staple fiber prices to fall less than cost reductions, thereby squeezing processing profits. This pattern of "costs falling but prices sticky" epitomizes the imbalanced profit distribution across the textile supply chain.
Industry Impact
The oil decline is not a one-way benefit. For upstream PX and PTA producers, weaker oil prices increase inventory depreciation risks, potentially prompting some plants to cut production to support prices, affecting supply expectations. For midstream chemical fiber companies, lower raw material costs should enhance competitiveness, but insufficient downstream orders prevent price hikes, exacerbating inventory pressure.
For downstream textile and apparel companies, especially those relying on export orders, the cost dividend from oil declines may be offset by RMB exchange rate fluctuations and rising shipping costs. Moreover, Brent remains above $87, historically high, meaning the cost center for chemical fiber raw materials has not substantially shifted down; cost pressure is only temporarily alleviated.
From an industrial cluster perspective, weaving enterprises in Shengze and Keqiao have adopted a wait-and-see stance, shortening raw material procurement cycles from the usual 15-20 days to 7-10 days to avoid price volatility risks. While this "hand-to-mouth" strategy reduces inventory risks, it weakens order visibility for chemical fiber companies and amplifies market uncertainty.
Notably, short-term oil price fluctuations are often linked to geopolitical events and OPEC+ production policies rather than pure supply-demand fundamentals. Textile companies that adjust procurement based solely on daily oil changes risk falling into a trap of chasing gains and cutting losses. A more rational approach is to monitor weekly or monthly oil trends and align procurement plans with order cycles.