International crude oil markets experienced a sharp volatility on Monday. WTI crude broke through the $75/barrel mark, surging 5.01% intraday, while Brent crude also jumped 5.00% to close at $79.74/barrel. The trigger was a dual geopolitical shock: Iran's announcement to close the Strait of Hormuz and the US decision to reimpose sanctions on Iran. For the textile industry, every $1 increase in oil prices creates a chain reaction in chemical fiber costs—this is not a short-term sentiment swing but a potential game-changer for raw material pricing in the second half of the year.
How Geopolitical Risks Transmit to the Textile Chain
The Strait of Hormuz is the world's most critical oil chokepoint, handling about 20 million barrels per day. A disruption could push oil prices to $80 or higher in the short term. In the textile chemical fiber chain, PTA (purified terephthalic acid) and MEG (monoethylene glycol) are key feedstocks for polyester filament and staple fiber, both derived from naphtha or crude oil. China's polyester output exceeded 50 million tons in 2025, with high dependence on imported crude. Every 10% rise in oil prices translates to a 6%-8% increase in chemical fiber raw material costs.
Looking at the timeline, WTI crude started Monday at $73 and broke through $74 and $75 within hours, a rare single-day gain of over 5%. More concerning is that Trump's decision to resume sanctions on Iran suggests a new cycle of sanctions and countermeasures, making it highly likely that oil prices will remain elevated in the medium term. For textile mills already operating on thin margins, a sudden spike in raw material costs could turn orders into losses.
Chemical Fiber Price Expectations and Industrial Cluster Reactions
Polyester filament and staple fiber prices usually track crude oil closely but with a one- to two-week lag. According to industry data, last week's POY (pre-oriented yarn) prices in Jiangsu-Zhejiang regions (Shaoxing, Xiaoshan, Shengze) ranged from 7,200-7,400 yuan/ton, while FDY (fully drawn yarn) was at 7,700-7,900 yuan/ton. If crude stays above $75, chemical fiber plants are expected to hike prices by 200-400 yuan/ton next week. For industrial clusters like Nantong and Keqiao, this means rising grey fabric procurement costs.
A divergence is emerging within the industry. Large chemical fiber firms (e.g., Tongkun, Hengyi) with captive PTA capacity can better absorb oil price shocks and use futures hedging. But small and medium-sized weaving mills and traders lack such tools and must passively accept price increases. Some dyeing plants in Shaoxing have been notified that processing fees may rise 5%-8% in H2 to cover energy costs. Knitting enterprises in Foshan and Dongguan face more acute pressure—their fast-fashion clients are highly price-sensitive, leaving little room for price hikes.
Potential Impact on Export Orders
China's textile and apparel exports remained stable in H1 2025, totaling about $140 billion. However, the oil price surge could erode export competitiveness through two channels. First, rising chemical fiber fabric costs force export quotes upward, weakening the edge against low-cost competitors like Vietnam and Bangladesh. Second, ocean freight rates may follow, as bunker fuel prices are closely linked to crude. If Middle East tensions persist, risks on the Red Sea-Suez Canal route could again push up Asia-Europe freight costs.
From the buyer side, Western brands are currently in the delivery phase for Fall/Winter 2025 orders and the inquiry phase for Spring/Summer 2026. Oil-driven raw material uncertainty may prompt brands to delay orders, squeeze margins, or demand cost-sharing from suppliers. Exporters must guard against a 'price transmission fracture'—where upstream costs rise but downstream clients refuse to accept higher prices, leaving mills to absorb the gap.