Crude oil has surged past $86, and polyester filament yarn prices have climbed for consecutive days, putting the textile industry under renewed cost pressure. But unlike the price spike earlier this year—when prices jumped 3,000 yuan in three days—the current market backdrop is fundamentally different: inventory structures have inverted, demand has entered a slack season, and supply chain sentiment has shifted from chasing gains to waiting on the sidelines.
Background
The Middle East geopolitical conflict has escalated again. After Iran attacked merchant ships in the Strait of Hormuz, the U.S. military launched five waves of airstrikes starting March 12, targeting over 300 sites including air defense systems and naval facilities. Iran responded with missiles and drones aimed at U.S. bases in Bahrain, Kuwait, and Qatar, and announced the temporary closure of the Strait of Hormuz. President Trump declared on March 13 that the U.S. would resume a naval blockade of Iran and charge a 20% fee on cargo passing through the strait, but reversed the fee the next day. Iran subsequently declared the previous memorandum of understanding with the U.S. null and entered a state of war.
Brent crude surged nearly 10% on March 13, its biggest single-day gain since June, pushing New York crude above $86. Polyester filament yarn began rising on March 8 and has posted gains for multiple consecutive trading days, reversing the previous downtrend.
Industry Impact: Inverted Inventory and Demand
Compared to the price surge earlier this year, current polyester filament inventories are significantly higher. Industry data shows POY inventory at 26.4 days, FDY at 32.5 days, and DTY at 37.3 days, all about 10 days higher than after the Chinese New Year. In contrast, gray fabric inventories have dropped from 24 days to 17 days, indicating that downstream weaving mills have drawn down finished goods but show weaker willingness to purchase raw materials.
Demand is also less supportive. In early 2024, the "golden March and silver April" season meant mills had ample orders and a genuine need to buy raw materials. Now, the industry is in a traditional low season, with loom utilization rates generally low, reducing the urgency to purchase. This means the current price hike is unlikely to trigger the same "price up—panic buying—price up again" cycle seen earlier.
The deeper shift is in market sentiment. During the earlier surge, many textile companies hoarded inventory, expecting further gains. But after months of high raw material costs, the industry has learned a harsh lesson: upstream price increases are swift, but passing them through to fabrics and garments is a painful, drawn-out negotiation. Old inventory is especially hard to reprice. As a result, the industry now prefers to hold cash and wait, rather than build stock.
Macro Risks and Warnings
Zooming out to the global energy landscape, this shock could be more damaging than it appears. Many countries had already depleted their oil inventories and only partially replenished them, leaving them with limited buffer. If the Strait of Hormuz closure persists, the ripple effects will accelerate: some nations' production will be disrupted, potentially speeding up order shifts to China, but at the same time, overseas demand may be further suppressed, reigniting inflation and triggering global financial risks.
As the blockade lengthens, the probability of black swan events rises exponentially. For textile companies, raw material price volatility is only the surface risk; the deeper threat is a sudden contraction in end demand or sharp currency fluctuations.