International oil prices have surged past $86 per barrel, triggering consecutive daily price increases for polyester filament yarn. Unlike the early-year rally that saw prices jump by 3,000 yuan per ton in a single week, the current wave is driven by fundamentally different dynamics.
Geopolitical Tensions Ignite Cost Side
The closure of the Hormuz Strait is the direct trigger. After Iran announced the blockade, the U.S. launched multiple airstrikes targeting over 300 military assets. The U.S. briefly proposed a 20% fee on Strait cargo, retracting the next day, but the intensity of military confrontation far exceeds the early-year standoff. Brent crude posted its largest single-day gain in months, nearly 10%.
Polyester filament yarn began rising on the 8th, with POY, FDY, and DTY all increasing for several consecutive trading days. Unlike the early-year situation where polyester plants held low inventories, current industry inventory levels are high: POY at 26.4 days, FDY at 32.5 days, and DTY at 37.3 days—each about 10 days higher than at the start of the year.
Downstream Demand Shows Stark Divergence
Grey fabric inventories tell the opposite story. Average grey fabric inventory now stands at about 17 days, far below the 24 days seen in early spring. This pattern of 'raw material stockpiling, fabric destocking' indicates that weaving mills are actively consuming existing stocks rather than purchasing new raw materials.
Operating rates confirm weak demand. The industry is in a traditional off-season, with loom utilization declining significantly. Weaving mills have little incentive to buy polyester filament. During the peak 'golden March and April' season, mills had substantial pending orders, creating natural demand; now, new orders are scarce, and most mills are buying only for immediate needs or suspending purchases altogether.
Market Sentiment Shifts from Hoarding to Wait-and-See
If the early-year rally sparked a 'hoarding and holding' mentality—epitomized by the joke 'yarn is gold, and fabric in the warehouse is gold too'—the past six months of high raw material prices have fundamentally reshaped industry psychology.
Raw material price increases are sharp and swift, but price transmission to grey fabrics and finished textiles is painfully slow. Every negotiation with downstream customers involves intense bargaining, often ending in compromise. For old inventory, raising prices even slightly is nearly impossible. This 'easy upstream, hard downstream' dynamic has pushed more companies to adopt a wait-and-see approach rather than actively stockpiling.
As raw material prices continue to climb, market polarization will intensify. Well-capitalized firms with bargaining power can hedge via futures or long-term contracts; small and medium-sized weaving mills and traders face greater margin compression.
Macro Risks Demand Attention
On a global scale, this geopolitical crisis coincides with low energy inventories. Many countries have depleted their crude oil reserves and have only partially replenished them, leaving them with limited buffers. A prolonged Strait closure could trigger more severe ripple effects.
On one hand, production disruptions in some countries may accelerate order shifts to China; on the other hand, overseas demand could be further suppressed, potentially fueling inflation and triggering global financial risks. For textile exporters, exchange rate volatility, rising freight costs, and order cancellations are all increasing.