International oil prices were reignited by geopolitical tensions in mid-July. The re-blockade of the Hormuz Strait pushed WTI crude back into the $80 range, with a near 3% single-day gain. For the textile industry, this volatility quickly transmitted to the polyester chain, with polyester filament yarn prices rebounding consecutively on July 8 and 9, and some polyester factories even raising prices twice in one day.
Behind this price spike lies deep anxiety over raw material supply disruptions. The memory of the early-year raw material surge is still fresh, and current inventory levels among textile enterprises are generally low. Panic buying erupted: on July 8, the average sales-to-production ratio for polyester filament yarn soared to 361.9%, with the weekly average reaching 132.7%. These figures, far above normal levels, indicate downstream companies are scrambling to secure supplies at almost any cost.
Background: Short-Term Shock vs. Long-Term Game
The blockade of the Hormuz Strait stems from renewed US-Iran conflict. On July 8, US Central Command launched strikes on Iran, prompting Iran to close the strait in response. A prior memorandum of understanding had been signed, but the situation rapidly deteriorated. Notably, a large number of tankers had already exited the strait before the blockade, easing some global supply pressure and preventing oil prices from hitting $100 immediately.
However, market sentiment remains cautious. The unpredictability of geopolitics means that whether oil prices continue to rise depends entirely on further escalation. For the textile industry, this translates into persistent uncertainty over raw material costs.
Industry Impact: Polyester Sector Supported, Weaving Sector Under Pressure
The polyester chain's price increase is not solely event-driven. Industry data shows that current polyester filament yarn capacity utilization is only 74.6%, well below last year's level. Frequent maintenance shutdowns at upstream PTA and PX plants have further tightened supply, providing fundamental support for raw material prices. Thus, even without the strait incident, downside room for polyester prices was limited.
Downstream weaving mills face a more complex situation. The current season is a slack period for textiles, with order volumes already scarce. Operating at full capacity to hedge against rising raw material costs risks inventory buildup, while waiting could expose them to further cost increases. The volatility of raw material prices in the first half of the year has already strained mills, and this event exacerbates their decision-making challenge.
Market reactions suggest this sales surge is more about panic buying than genuine demand recovery. If geopolitical risks subside, raw material prices could fall rapidly, leaving those who stockpiled facing inventory depreciation.