Crude oil costs account for 60-70% of chemical fiber feedstock production expenses. When international oil prices start to soften, the profit balance across the entire chain shifts. Iran's official announcement of a 60-day waiver of transit surcharges for commercial vessels in the Strait of Hormuz—a chokepoint handling roughly one-third of global crude shipments—has rapidly deflated the geopolitical risk premium in oil prices, driving Brent and WTI benchmarks lower.
Upstream feedstock prices lead the decline
China's chemical fiber raw materials are heavily dependent on imports from the Middle East. Previous disruptions in the Strait of Hormuz directly inflated landed costs of PX, MEG, and methanol. During the congestion period, feedstock inventories ran low, forcing mills to accept high-priced supplies and squeezing profit margins. With the channel now open and low-cost cargoes arriving, combined with weakening crude support, PX and MEG prices have corrected notably. This suggests polyester plants could see raw material procurement costs enter a downtrend within three to four weeks.
Midstream polyester and nylon stabilize
Cost relief quickly transmitted to mainstream products like polyester, PET, and nylon. In recent months, the industry suffered from high costs and weak demand, prompting conservative operating rates, elevated inventories, and depressed margins. Now that feedstock prices are easing, polyester products have stopped falling, with some specifications even testing small price increases. However, this stabilization is cost-driven rather than demand-driven. Whether operating rates can sustainably recover depends on actual end-user orders.
Downstream textile mills show revived restocking
First-half textile orders were generally weak, with home textile and apparel brands purchasing only on a need-to basis amid cautious sentiment. As chemical fiber costs steadily decline, the operating pressure on small and medium enterprises has eased, and their restocking enthusiasm has notably increased. Recently, weaving mills have accelerated inquiries, and some orders have shifted from 'wait and see' to 'small-lot locking.' This restocking behavior provides short-term support for the entire chain and also leaves room for home textile and apparel brands to offer discounts in the upcoming autumn-winter ordering season.
Limited window, no reversal in sight
The 60-day free passage is a short-term policy, leaving significant uncertainty. After the policy expires, navigation rules and geopolitical dynamics could change again, bringing oil price volatility back. More critically, current domestic and international textile demand recovery remains sluggish. Domestic demand is constrained by weak consumer confidence, while external demand faces pressure from incomplete destocking cycles in Europe and the U.S. Cost benefits can repair corporate profits but are insufficient to drive a broad industry upturn.
Sector enters a bottoming and repair phase
In summary, the short-term Hormuz passage dividend opens a temporary breathing window for the depressed chemical fiber and textile market. Companies can use this opportunity to optimize raw material inventory structures, lower production costs, and repair balance sheets. However, medium- to long-term attention must remain on crude oil price trends, geopolitical variables, and the actual pace of end-demand recovery. The market is likely to experience moderate volatility with gradual repair; a trend reversal still requires clearer demand signals.