A policy shift in a single shipping route is rewriting the short-term pricing logic for global chemical raw materials. Iran announced 60-day free passage through the Strait of Hormuz, waiving commercial vessel surcharges, which immediately released pent-up crude oil capacity and drove Brent and WTI prices down. For the chemical fiber textile chain long trapped in high costs and weak demand, this is a rare breathing spell.
Cost Side: Raw Material Prices Loosen, Profit Repair Window Opens
The Strait of Hormuz handles about one-third of global seaborne crude oil trade, and its transit efficiency directly determines the landed cost of feedstocks for Asian refineries. Previous congestion and surcharges due to geopolitical tensions had pushed core chemical fiber raw materials like PX, MEG, and methanol to high levels, squeezing cash flow of domestic polyester plants to near break-even.
After the free passage policy took effect, Middle Eastern supplies flooded the market, quickly reversing the tight supply situation. Industry data show that within a week of the announcement, PX prices fell over 5% and MEG spot prices weakened correspondingly. For a leading polyester company consuming millions of tons of feedstock annually, this alone could free up hundreds of millions of yuan in profit space.
Chain Transmission: Polyester Stabilizes, But Demand Remains Weak
Cost relief has started to flow downstream. Polyester filament, polyester staple fiber, and nylon have stopped falling and stabilized over the past two weeks, with some specifications even testing small price increases. Previously, operating rates were low and inventories high. Now, with low-cost feedstock arriving and seasonal restocking demand kicking in, market transactions have clearly warmed.
However, this repair is cost-driven rather than demand-driven. End-use textile orders were sluggish in the first half of the year, constrained by weak consumer confidence at home and ongoing destocking cycles abroad. Most small and medium textile enterprises still purchase only for immediate needs, without large-scale stockpiling. Whether cost relief translates into sustained price increases depends on the actual pace of end-order recovery.
Policy Window: Uncertainty After 60 Days
The free passage benefit has a clear time boundary - 60 days. After expiry, transit rules and geopolitical dynamics could tighten again, potentially pushing oil and feedstock prices back up. This means the current cost repair window is essentially a 'limited-time discount', not a trend reversal.
For chemical fiber textile companies, the next two months will be critical for inventory management and risk hedging. On one hand, they should accelerate restocking at low prices to optimize inventory structure; on the other, they should avoid overcommitting to forward price locks, to stay flexible in case of price swings when the policy expires.