International oil prices have swung from stability to sharp volatility within a week, driven by the renewed blockade of the Strait of Hormuz. This event has directly ignited price hikes across the polyester supply chain, with polyester filament yarn prices rebounding sharply, forcing downstream textile firms to make procurement decisions during an off-season.
Background
On July 8, the US Central Command announced forceful strikes against Iran in response to attacks on commercial shipping. Subsequently, an Iranian naval air defense officer was killed in the US attack, and the Strait of Hormuz was again closed. This pushed US crude oil prices back to the $80 range, with a near-3% rise on July 12. The escalation marks a sharp contrast to the brief calm after the US-Iran memorandum of understanding earlier this year, reigniting market concerns over geopolitical risk.
Industry Impact
The polyester supply chain reacted swiftly. On July 8, polyester filament yarn prices rebounded suddenly, with some polyester plants raising prices twice in a single day, reversing a prolonged decline. Panic buying erupted among downstream weaving mills—average sales-to-production ratio for polyester filament yarn soared to 361.9% on July 8, and the weekly average reached 132.7%. This surge reflects a classic 'fear of price hikes' mentality: textile firms held low raw material inventories, still scarred by the sharp price spikes earlier this year, and are now forced to stock up despite the traditional off-season with limited orders.
On the supply side, polyester plant capacity utilization stands at just 74.6%, far below last year's levels, with frequent maintenance shutdowns at upstream PTA and PX facilities providing fundamental support for price increases. However, downstream weaving mills face a dilemma: running production risks building inventory, while halting operations risks missing further price gains. The volatile raw material prices in the first half of the year have left firms exhausted, and they are now navigating step by step.
Future Outlook
The duration of the Strait of Hormuz blockade remains a key variable. Although a large number of oil tankers had exited the strait before the closure, easing short-term global supply concerns, the 'on-again, off-again' nature of US-Iran conflicts means escalation is always possible. While the market generally expects the blockade to be short-lived, a broader conflict could push oil prices back to $100. For the textile industry, this means polyester filament yarn prices will likely remain strong in the near term, but whether end-demand can recover remains uncertain.