The 60-day free navigation policy in the Strait of Hormuz has triggered a notable decline in international oil prices, with Brent and WTI crude oil falling continuously as geopolitical risk premiums rapidly dissipate. This shift directly impacts the upstream cost structure of the chemical fiber textile chain—China relies on the Middle East for about 40% of its chemical fiber raw material imports, and the previous supply tightness and high inventory costs are now easing.
Immediate Cost Transmission
The oil price decline first affects core raw materials like PX, MEG, and methanol. Industry data shows PX prices dropped over 5% within a week of the policy announcement, with MEG following suit. Import arrivals have accelerated as the channel clears, relieving the pressure from high-cost inventories accumulated during the supply squeeze. For mainstream products like polyester, PET, and nylon, the easing cost side means profit margins are starting to recover.
Previously, the industry was stuck in a dilemma of high costs and weak demand. Operating rates were conservative, inventories high, and margins under pressure. Now, cost relief is passing downstream, with chemical fiber product prices stabilizing and some grades even seeing slight upticks. Market activity has notably improved, especially in polyester filament and staple fiber, where traders and downstream weaving mills are beginning to restock cautiously.
Downstream Textile Relief
In the first half of the year, textile end-order intake was sluggish, with export orders impacted by overseas inventory cycles and domestic demand showing no clear improvement. Companies mostly relied on just-in-time replenishment, with a strong wait-and-see attitude. As chemical fiber costs steadily decline, the raw material procurement costs for small and medium-sized textile enterprises have decreased, easing cash flow pressures. This creates conditions for home textile and apparel terminals to offer promotions, potentially stimulating consumer demand.
However, the recovery in both domestic and foreign textile demand remains weak. The pace of restocking in European and American markets is slow, and domestic consumer confidence is still rebuilding. Whether cost relief translates into actual order growth depends on the real start of end-demand. Feedback from major industrial clusters like Shengze and Keqiao indicates that operating rates have risen but have not yet reached peak season levels.
Window Risks and Structural Opportunities
This navigation benefit is only a 60-day short-term policy. After expiration, rules may revert, and geopolitical uncertainties remain. The market must face two core risks: first, after the policy window closes, transit surcharges may resume, putting upward pressure on oil prices; second, the current crude oil market is in a supply-demand game, with OPEC+ production policy adjustments also capable of disrupting prices.
Therefore, this cost repair is likely temporary rather than a trend reversal. The chemical fiber textile industry will enter a bottom-building recovery cycle, with structural rather than broad-based improvements. The upstream raw material sector benefits most directly, midstream processing companies need time for margin repair, and downstream terminals await a demand catalyst.