On July 8, the re-blockade of the Strait of Hormuz sent shockwaves through global crude oil markets, with U.S. oil prices briefly returning to the $80 range and surging nearly 3% on a single day on July 12. For the textile industry, this is not just another geopolitical flare-up but a direct shock to the fragile balance of the polyester supply chain. Polyester filament yarn prices immediately rebounded, reversing the previous trend of consecutive declines. On July 8 alone, the average production-sales ratio for polyester filament yarn soared to 361.9%, with the weekly average reaching 132.7%, and some polyester factories raised prices twice in a single day.
Background and Market Reaction
The immediate trigger for the conflict was Iran's attempt to impose tolls on passage through the Strait of Hormuz, which the U.S. rejected, leading to skirmishes. According to CCTV News, an Iranian naval air defense officer was killed in a U.S. attack on Jask, and the strait was subsequently closed. Although a previous memorandum of understanding between the U.S. and Iran had offered temporary respite, this escalation shows that the game between the two sides is far from over.
Crude oil, as the source of the polyester supply chain, has a direct impact on prices of polyester filament yarn, PTA, and PX. Since July 8, polyester yarn prices have rebounded quickly, abruptly ending promotional activities driven by weak seasonal demand. Industry data shows that current capacity utilization for polyester filament yarn is only 74.6%, well below last year's levels, while upstream PTA and PX maintenance is frequent, with supply-side constraints providing fundamental support for price increases.
Industry Impact: Short-Term Panic Buying vs. Long-Term Demand Concerns
This wave of production-sales activity is essentially panic buying. Textile companies, still reeling from a sharp raw material price surge earlier this year, currently hold low inventory levels. Faced with the prospect of oil prices potentially returning to $100, stockpiling has become a direct risk-aversion strategy. The 361.9% production-sales ratio on July 8 reflects downstream weaving mills' passive response during the off-season.
However, the downstream weaving sector faces a more difficult dilemma: seasonal orders are scarce, and starting production to build inventory risks product accumulation and capital tie-up; yet stopping production risks rising raw material costs. Having been battered by volatile raw material prices in the first half of the year, weaving mills now can only take things step by step.
In the long term, whether oil prices break $100 depends on further escalation of the Middle East situation. Notably, before the strait closure, a large number of oil tankers had already sailed out, alleviating the global crude supply shortage to some extent. The market generally believes the closure will not last, but the unpredictability of geopolitics means any short-term conflict could again trigger price volatility.
Practical Recommendations
For Buyers - Increase raw material inventory moderately in the short term, but avoid chasing highs: current price increases are driven by panic, and actual end demand has not recovered. If tensions ease, prices may fall. It is recommended to keep inventory cycles at 15-20 days to avoid excessive capital lock-up. - Monitor PTA and PX maintenance updates: supply-side constraints are a key factor supporting price increases. Once maintenance ends and capacity recovers, raw material prices may face downward pressure. Track plant operating rates through industry channels.
For Weaving Mills - Plan production cautiously: with limited seasonal orders, blindly building inventory may exacerbate financial pressure. Prioritize fulfilling existing orders and avoid expanding operating rates solely to stockpile raw materials. - Use futures tools to hedge risks: if concerned about further raw material price increases, consider hedging through PTA or polyester filament yarn futures to lock in some costs. For small and medium enterprises, negotiate long-term contracts with upstream polyester factories to secure price protection clauses.
Overall, the short-term blockade of the Strait of Hormuz has reversed the downward trend in polyester yarn prices, but a stronger trend does not mean sustained increases. Textile companies must find a balance between panic and rationality—closely monitoring geopolitical dynamics while returning to the fundamentals of end demand. After all, true market recovery is never achieved through a single crisis event.