Escalating geopolitical tensions in the Middle East have once again disrupted global energy markets, with the Strait of Hormuz partially closed and crude oil prices surging past $86 per barrel. Brent crude recorded a near-10% single-day gain, the largest in six months. Concurrently, polyester filament yarn prices have risen for consecutive trading days since the 8th, reversing a weeks-long downtrend.
While superficially resembling the price surge seen earlier this year, the underlying dynamics are fundamentally different. In early 2024, factory inventories for POY, FDY, and DTY stood at just 18.7, 25, and 27.6 days, respectively. Today, those figures have climbed to 26.4, 32.5, and 37.3 days—an average increase of nearly 10 days. Grey fabric inventories, meanwhile, have dropped from 24 days to around 17 days.
Inventory Structure Reversal Amid Weak Demand
These inventory shifts reveal a critical divergence: upstream polyester mills now face significantly higher stock pressure than in early 2024, while downstream weavers hold leaner fabric inventories. This means polyester producers have less pricing power, while weavers, facing weak order books, show little urgency to restock.
Demand conditions further underscore the difference. Early 2024 coincided with the peak "golden March and silver April" season, when textile mills held substantial backlogs and raw material procurement was a necessity. The current period falls in the traditional off-season, with loom utilization rates low and purchasing appetite markedly subdued.
Market Sentiment Shifts from Hoarding to Caution
When raw material prices skyrocketed earlier this year, many textile firms hoarded stocks, expecting further gains. After months of market recalibration, that mindset has reversed. Price increases at the raw material level have proven extremely difficult to pass through to grey fabrics and finished goods, often resulting in protracted negotiations and partial concessions.
Today, the industry is broadly averse to building inventories, preferring to hold cash and wait. This cautious stance means that even if crude and polyester prices continue to rise, downstream buying will likely lag, intensifying market polarization.
Macro Variable: The Chain Effects of Energy Blockade
A key macro factor is global energy demand. Many countries' crude oil inventories remain low, with only partial replenishment completed, leaving them vulnerable to supply disruptions. If the Strait of Hormuz blockade persists, the resulting energy shortages could trigger cascading effects.
On one hand, production halts in affected countries may accelerate order shifts to China. On the other, overseas demand could be further suppressed, potentially fueling inflation and triggering global financial risks. For the textile industry, this means heightened export uncertainty and greater order volatility.