On July 8, the US-Iran military conflict escalated sharply, leading to the re-blockade of the Strait of Hormuz. This geopolitical event quickly rippled through the textile industry: international oil prices surged, with WTI crude briefly returning to the $80 range, and the polyester chain experienced severe turbulence. After a prolonged period of consecutive declines and promotions, polyester filament yarn prices reversed sharply, with some polyester factories raising prices twice in a single day. On July 8, the average production-sales ratio for polyester filament yarn soared to 361.9%, and the weekly average reached 132.7%, reflecting the panic buying sentiment downstream.
Event Background
The trigger for this conflict was Iran's attempt to impose tolls on passage through the Strait of Hormuz, which the US rejected and responded with military strikes. On July 8, the US Central Command announced a series of forceful strikes against Iran in response to Iranian attacks on commercial shipping in international waterways. According to CCTV News, Iranian Navy air defense officer Hamidreza Dehghan was killed in a US attack on Jask on July 12. Prior to this, the Strait of Hormuz had been re-closed by Iran.
This event shattered the brief calm brought by the earlier US-Iran memorandum of understanding. Earlier this year, the two sides had reached an agreement, but it was torn up after only a few months. Notably, before the blockade, a large number of oil tankers had already sailed out of the strait, alleviating the global crude supply crunch to some extent. As a result, oil prices did not spike to $100 as they did during the previous conflict. The market generally believes the blockade may not last long, but the long-term trend depends on whether the situation escalates further.
Industry Impact
The polyester sector has strong leverage in this price rebound. Current capacity utilization for polyester filament yarn equipment is only 74.6%, significantly lower than the same period last year. Frequent maintenance shutdowns upstream for PTA and PX have tightened supply, providing support for raw material prices. This low operating rate environment means that any demand-side pulse can trigger significant price elasticity.
However, downstream weaving enterprises face a more difficult situation. It is currently the traditional off-season, with orders already scarce. Running machines at full capacity to build inventory risks product overstock; stopping production risks missing further raw material price increases. The frequent fluctuations in raw material prices in the first half of the year have already exhausted weaving companies. This round of procurement is more of a defensive move—'keep some in hand, don't panic'—driven by the painful memory of the raw material surge at the beginning of the year and the current low inventory levels.
Nevertheless, this wave of production-sales spikes is essentially panic buying rather than a genuine recovery in end demand. The stark contrast between the 361.9% production-sales ratio on July 8 and the weekly average of 132.7% indicates that procurement was concentrated in a very short period following the conflict news, raising questions about sustainability. Once geopolitical tensions ease or oil prices fall, these inventories could become a burden that depresses prices.