Iran's announcement of a 60-day free transit policy at the Strait of Hormuz, eliminating surcharges for commercial vessels, has directly impacted the global energy and chemical supply chain. International oil prices have dropped sharply as geopolitical risk premiums fade, with Brent and WTI crude declining consecutively. This provides a rare cost relief window for China's chemical fiber and textile industry, which has long been squeezed by high raw material costs.
Cost Side: Raw Material Prices Ease, Industry Chain Transmission Accelerates
The oil price decline has quickly transmitted to the upstream of the chemical fiber chain. Domestic key raw materials such as PX, MEG, and methanol heavily rely on imports from the Middle East. Previous congestion at the Strait led to tight supply and high prices, continuously compressing corporate profits. Now, with the strait open and low-cost raw materials arriving in bulk, coupled with weakened crude cost support, upstream raw material prices have seen significant easing. Industry data shows that spot MEG prices fell by over 5% within a week of the policy announcement, with PX prices also retreating, directly lowering procurement costs for polyester producers.
This cost benefit is now flowing downstream. Major chemical fiber products like polyester, PET, and nylon have stabilized or even rebounded slightly. Previously, the industry was trapped in a dilemma of high costs and weak demand, forcing companies to maintain conservative operations and high inventory levels. With the easing of cost pressures, profitability for chemical fiber plants has improved, and operating rates are expected to gradually recover.
Demand Side: Restocking Sentiment Improves, but Recovery Remains Fragile
The cost-side boost has also indirectly activated the downstream textile market. In the first half of the year, textile end-users faced weak orders and strong wait-and-see sentiment, with most procurement limited to urgent small-lot orders. Now, with steadily declining chemical fiber costs, the operational pressure on small and medium-sized textile enterprises has been alleviated, boosting their restocking enthusiasm. Feedback from major textile clusters like Keqiao and Shengze indicates increased inquiries and sampling for grey fabrics and finished fabrics, with production-to-sales ratios improving month-on-month, driving a chain-wide recovery.
However, it must be noted that this recovery is primarily driven by cost-induced restocking rather than genuine end-consumer demand recovery. The domestic apparel and home textile market remains in a weak recovery phase, while external demand faces uncertainties from global inflation and geopolitical tensions. Without a sustained increase in end-user orders, the cost benefit alone is unlikely to trigger a major market rally, and the industry is expected to undergo structural repair.
Risks and Uncertainties: Post-60-Day Window Concerns
This transit benefit is only a 60-day short-term policy, introducing significant uncertainty. After the policy window closes, transit rules may revert, or geopolitical tensions could escalate again, potentially pushing oil and raw material prices higher. Additionally, the crude oil market itself is fraught with conflicting factors, including OPEC+ production policies and global economic growth expectations, which could cause further volatility.
For chemical fiber and textile companies, this 60-day period is more like a 'sprint' window than a signal of trend reversal. Enterprises should moderately increase raw material procurement at low costs, optimize product mix, and strictly control finished goods inventory to avoid passive positions from speculative buying. In the long run, industry trends will depend on the pace of end-demand recovery and the evolution of geopolitical dynamics, with the market likely to maintain a pattern of moderate volatility and steady repair.