The shipping restrictions at the Strait of Hormuz are transforming from a geopolitical event into a cost variable for the textile industry. US President Trump's latest announcement imposes a blockade only on Iranian ports and vessels carrying Iranian goods, while canceling the previously proposed "US 20% compensation fee" in favor of trade and investment agreements between Gulf states and the United States. This policy combination directly rewrites the trade flows and pricing logic of global textile raw materials.
Risk of Raw Material Channel Disruption
The Strait of Hormuz handles approximately 30% of global oil and petrochemical product transportation, serving as a critical artery for polyester fiber, nylon, and other synthetic fiber raw materials. Iran, as a major Middle Eastern petrochemical producer, heavily relies on this waterway for exports of ethylene glycol, paraxylene, and other synthetic fiber monomers. The blockade means that Asian textile giants like China and India will face logistical disruptions in importing petrochemical raw materials from Iran. Even if the blockade targets only Iran, shipping insurance costs and the extended voyage around the Cape of Good Hope will be passed on to all raw material shipments passing through the strait, driving up overall freight rates.
Chinese Customs data shows that in 2025, China imported about 12% of its ethylene glycol and 8% of its paraxylene from Iran. Once supply is cut off, premiums for alternative sources (such as Saudi Arabia and the United States) will open up in the short term. Textile companies typically maintain raw material inventory cycles of 30-45 days. If the blockade lasts more than two months, small and medium-sized synthetic fiber factories may face production shutdowns.
Investment Agreements Behind Supply Chain Restructuring
Trump's replacement of the compensation fee with Gulf investment agreements essentially converts military costs into economic leverage. In exchange for US security guarantees, Gulf states may increase investment in US petrochemical infrastructure, accelerating the capacity release of US ethane cracking to ethylene projects. This will make the United States a new supply pole for global synthetic fiber raw materials, altering the current Middle East-dominated raw material landscape.
For the Chinese textile industry, this signals two things: first, in the short term, buyers relying on Middle Eastern raw materials should quickly lock in non-Iranian sources; second, in the medium to long term, attention should be paid to the cost-effectiveness and logistics routes of US synthetic fiber raw materials. The route from Ningbo Port to Houston Port is 10-15 days longer than the Middle East route, but US ethylene glycol exports have grown to 15% of global supply in recent years, with price competitiveness enhanced by declining shale gas costs.
Direct Impact on Industrial Clusters
Textile clusters such as Keqiao, Shengze, and Nantong have synthetic fiber fabrics accounting for over 60% of their production. Small and medium-sized enterprises in these areas often adopt a "buy-as-you-go" raw material procurement model with weak inventory buffers. Once raw material prices jump due to shipping disruptions, profit margins on finished fabrics will be squeezed instantly. In the first quarter of 2025, polyester chip prices had already risen 8% due to oil price volatility. If the Hormuz crisis escalates, the increase could expand to 15%-20%.
Home textile and garment foreign trade companies are also under pressure. Export orders are typically locked in 3-4 months in advance, and unexpected raw material cost increases will directly erode profits. Some companies may be forced to invoke price renegotiation clauses, but in a buyer's market, bargaining power is limited. A deeper impact is that supply chain uncertainty will accelerate international brands' assessment of "near-shore sourcing." If Vietnam, Bangladesh, and other countries delay deliveries due to raw material shortages, Chinese manufacturing may receive temporary additional orders, but only if raw material supplies remain stable.
Practical Recommendations
For Procurement Departments - Immediately review dependence on Iranian raw materials, establishing safety stocks of over 30 days for ethylene glycol and paraxylene. - Sign short-term floating price contracts with non-Iranian suppliers such as Saudi Arabia and Qatar to lock in priority supply rights. - Monitor export dynamics of synthetic fiber raw materials from the US Gulf Coast, evaluating shipping time and total costs from Houston to Ningbo.
For Foreign Trade Enterprises - Include raw material price fluctuation clauses in export contracts, triggering price renegotiation when synthetic fiber raw material prices rise more than 10%. - Diversify order delivery cycles to avoid concentrating all production capacity within the same raw material window. - Strengthen coordination with Southeast Asian contract manufacturers, enabling temporary order transfers to Vietnamese factories with inventory if Chinese raw material supply is disrupted.
The Strait of Hormuz blockade is not an isolated event but a landmark point at which the global textile raw material supply chain shifts from "low-cost stability" to "geopolitical volatility." What companies need to do now is not wait for the situation to clarify, but assume the worst-case scenario and hedge against it in advance.