International oil prices have returned to the $80 per barrel range, with the polyester chain following closely. From July 8 to 12, due to escalating geopolitical tensions in the Strait of Hormuz, polyester filament yarn prices reversed from decline to increase, with some polyester factories adjusting prices twice in a single day. Panic buying among downstream weaving mills pushed the average production-sales ratio to 361.9%, with the weekly average reaching 132.7%.
The Transmission Logic of Geopolitical Conflict
The trigger was the U.S. Central Command's announcement of a series of strikes against Iran in response to Iranian attacks on commercial shipping. Subsequently, an Iranian naval air defense officer was killed in the strikes, leading to the re-closure of the Strait of Hormuz. This chain directly boosted the risk premium on crude oil, pushing U.S. oil prices back above $80 per barrel.
For the polyester industry, crude oil is the source of the PX-PTA-polyester filament yarn chain. Every $1 fluctuation in oil prices amplifies step by step along the chain. Before this conflict, the polyester yarn market was in a state of continuous decline and promotional destocking. The sudden geopolitical event disrupted the existing price balance, prompting a rapid price hike from the polyester side.
Notably, this conflict occurred shortly after the U.S. and Iran had signed a memorandum of understanding, briefly easing bilateral relations. The memorandum lasted only a few weeks before being torn up, highlighting the long-term and repetitive nature of the two countries' rivalry. Industry insiders widely believe that 'fight and talk' will become the norm in the Strait of Hormuz, posing persistent uncertainty for petrochemical industries dependent on Middle Eastern crude.
Resonance of Supply Contraction and Panic Buying
The polyester side's rebound was not solely dependent on external events. Public data shows that the current capacity utilization rate for polyester filament yarn plants is only 74.6%, significantly lower than last year's level. Upstream PTA and PX plants are undergoing frequent maintenance, with supply-side contraction providing inherent support for raw material prices.
The geopolitical conflict ignited an already fragile supply-demand balance. On July 8, the single-day production-sales ratio soared to 361.9%, meaning sales volume was 3.6 times production, rapidly depleting inventory. This explosive growth was mainly driven by downstream panic restocking—the painful lesson of early-year raw material surges is still fresh, and weaving mills generally hold low inventory, fearing a price spike could leave them without supply.
However, the sustainability of this buying spree is questionable. Currently, it is the traditional off-season for textiles, with limited end-user orders. Weaving mills face a dilemma: running machines to produce finished goods risks inventory overhang, while stopping production risks missing out on further raw material price increases. Frequent raw material price fluctuations in the first half of the year have already exhausted companies, with most adopting a 'wait-and-see' approach.
End Demand Remains the Ultimate Solution
Whether oil prices can return to $100 depends on the duration of the Strait of Hormuz closure. Fortunately, a large number of tankers had already left the strait before the closure, preventing an immediate global crude supply shortage. The market generally believes the closure will not be prolonged, and oil prices may face a correction after the short-term spike.
However, the long-term trend still hinges on the evolution of the geopolitical situation. If the conflict escalates, leading to a substantial supply disruption, the upside room for oil prices will open. For the textile industry, this means polyester yarn prices may maintain a stronger trend, reversing the previous decline.
The more fundamental issue is when end demand will truly recover. Panic buying can temporarily boost the production-sales ratio but cannot change the fundamental lack of orders during the off-season. Only when downstream consumer markets such as apparel and home textiles recover can weaving mills smoothly pass on raw material costs to end users. Otherwise, high-cost inventory will translate into financial pressure for companies.