Hormuz Strait Blockade Ignites Oil Surge, Polyester Filament Price Rally and Industry Divergence

Crude oil surged past $86/barrel following the Strait of Hormuz escalation, triggering consecutive price hikes in polyester filament yarn. However, the industry backdrop for this rally differs sharply from the 3,000 yuan/ton spike earlier this year.

Inventory and Demand Mismatch Current polyester plant inventories are significantly higher than at the start of the year. POY, FDY, and DTY stock days stand at 26.4, 32.5, and 37.3 days respectively, up by about 8, 7, and 10 days from January. Meanwhile, grey fabric inventories are only 17 days, far below the 24-day level in early 2024.

This inverted inventory structure indicates that while weavers have destocked relatively well, upstream polyester links face heavier pressure. During the peak spring season, mills had rigid purchasing needs; now, in the traditional low season, loom utilization is low, and voluntary restocking is minimal.

Mindset Reversal: From Hoarding to Waiting At the start of the year, the market joked that "yarn is gold, and fabric is also gold," prompting many mills to hoard stock. But months of difficult price transmission taught the industry a lesson: raw material hikes pass through instantly, while fabric and garment price increases require painful negotiations with downstream buyers, and old inventory can barely be marked up.

Facing this new round of hikes, the entire industry is opting to hold cash rather than chase prices. This structural shift means that even if crude continues to climb, the polyester chain is unlikely to replicate its early-year strength.

Double-Edged Geopolitical Impact The Strait of Hormuz blockade not only raises oil costs but also transmits through global energy chains to textile trade. On one hand, production disruptions in the Middle East and South Asia may accelerate order shifts to China. On the other hand, high oil prices suppress overseas consumer demand and fuel inflation, increasing global financial risks.

For China's textile industry, short-term order inflows are positive, but prolonged blockade could severely damage overseas purchasing power.

Practical Recommendations ### For Buyers - Adopt a phased, small-lot procurement strategy; avoid large-scale stockpiling at current high prices. - Monitor Middle East developments; if the blockade exceeds two weeks, reassess supply chain risks and secure alternative sources. - Negotiate short-term floating price agreements with suppliers to share raw material volatility.

For Exporters - Track CPI trends in target markets; if major export destinations see sustained inflation, adjust pricing strategies and add price adjustment clauses. - Use the order transfer window to develop alternative clients in the Middle East and South Asia, while evaluating their delivery reliability. - Establish a crude-polyester linkage early warning system; activate contingency plans when Brent crude exceeds $90/barrel.