The renewed military standoff between the US and Iran over the Strait of Hormuz has sent shockwaves through the global textile raw material market. Since July 8, international oil prices have surged, with WTI crude briefly returning to the $80/barrel range, triggering an immediate rally across the polyester chain. Polyester filament yarn, which had been on a steady decline, rebounded sharply, with some polyester plants raising prices twice in a single day. But is this rally driven by genuine supply-demand fundamentals, or is it merely a short-term emotional reaction to geopolitical tensions?
Background: Geopolitical Spark Ignites Raw Material Prices
On July 8, the US Central Command announced strikes on Iranian targets in response to Iran's attacks on commercial shipping. The subsequent death of an Iranian naval air defense officer and the re-closure of the Strait of Hormuz quickly filtered into energy markets: on July 12, oil prices jumped nearly 3% in a single day.
For the textile industry, the closure of the Strait of Hormuz directly threatens the global crude oil shipping route, which is the source of the polyester chain. Polyester raw materials PX and PTA are already in a period of intensive maintenance, with capacity utilization rates well below last year's levels. Supply-side contraction, combined with surging feedstock costs, has given polyester plants the confidence to raise prices. Industry data shows that current polyester filament yarn capacity utilization stands at only 74.6%, significantly lower than the same period last year.
Industry Impact: Panic Buying Meets Off-Season Dilemma
The signal of rising raw material prices prompted downstream weaving mills to act quickly. On July 8, the average sales-to-production ratio for polyester filament yarn soared to 361.9%, with the weekly average reaching 132.7%. While these figures suggest strong demand on the surface, they actually reveal the industry's anxiety. Memories of the sharp raw material price spike earlier this year are still fresh, and with current raw material inventories generally low, panic buying has become the dominant strategy.
However, downstream weaving is in its traditional off-season, with limited new orders. Running full capacity risks building up inventory, while not running risks missing out if prices continue to rise. The volatile raw material prices in the first half of the year have already left weaving mills exhausted, and now they can only take things step by step. This "forced hoarding" model is essentially a stress response to future uncertainty, not a sign of genuine end-user demand recovery.
Notably, despite the oil price surge triggered by the Strait of Hormuz closure, the market generally believes the blockade will not last long. A large number of oil tankers had already passed through the strait before the closure, so there is no severe short-term shortage of global crude supply. As a result, oil prices have not shot straight to $100/barrel as they did earlier this year, providing a buffer for the price increases in the polyester chain.