International oil prices surged as the Hormuz Strait was re-blockaded due to escalating U.S.-Iran conflict, with WTI crude briefly returning to the $80 range. The polyester chain reacted violently: on July 8, polyester filament yarn (PFY) prices rebounded sharply, with some polyester plants raising prices twice within a single day, reversing the prolonged downtrend. Panic buying by downstream textile mills drove the average PFY sales-to-output ratio to an astonishing 361.9% on that day, with the weekly average reaching 132.7%.
This pulse-like rally stems from a sudden escalation in the U.S.-Iran conflict. The U.S. Central Command announced a series of strikes against Iran on July 8, resulting in the death of an Iranian naval air defense officer, followed by the re-closure of the Hormuz Strait. Despite a previous memorandum of understanding, the brief calm shattered, pushing oil prices up nearly 3% in a single day and igniting upstream raw material price expectations.
Supply Contraction and Panic Buying Drive the Rally
The polyester sector's rebound is not solely due to external factors. Industry data shows that current PFY plant utilization stands at only 74.6%, well below last year's levels. Frequent maintenance shutdowns of upstream PTA and PX units have tightened supply, providing intrinsic support for prices. When crude oil costs fluctuated, this fragile supply-demand balance was easily broken, amplifying price elasticity.
Downstream textile mills reacted more out of conditioned defense. The painful memory of the raw material surge earlier this year remains fresh, and most mills currently hold low inventory. If oil prices continue to rise, factories without stock could face severe shortages. Thus, even in the traditional off-season with weak orders, weaving mills chose to stockpile, preferring inventory risks over supply disruption. This "safety-first" mindset directly fueled the extreme sales-to-output data.
Off-Season Demand vs. Price Hike Expectations
However, the sales surge is more a product of panic buying than genuine demand recovery. The weaving market is currently in a slump, with limited new orders. Many factories face a dilemma: running machines to build inventory risks product accumulation, while halting production risks missing out on further price gains. The repeated volatility of raw material prices in the first half of the year has left mills exhausted, and this event adds further complexity to decision-making.
Feedback from major industrial clusters like Shengze and Keqiao indicates that loom utilization has not significantly increased despite the raw material price rise; some mills have even chosen to reduce output. This suggests that the current price hike is cost-driven rather than demand-driven. Once geopolitical risks ease, the risk of price correction cannot be ignored.
Can Oil Prices Break $100?
The market's key question is whether this conflict will push oil back to $100. Given that a large number of tankers had already exited the Strait before the blockade, short-term global supply is less tight than before, preventing an immediate spike to $100. Most analysts believe the "fight-and-talk" pattern between the U.S. and Iran will persist, making a prolonged blockade unlikely.
But long-term uncertainty remains. If the conflict escalates further and Iran adopts more aggressive blockade measures, the upside for oil prices could reopen. For the textile industry, this means continued raw material cost volatility. PFY prices are likely to remain strong in the short term, but the medium-to-long-term direction depends on the pace of geopolitical developments.