In July 2026, the Strait of Hormuz was re-blockaded following escalating US-Iran hostilities, sending international oil prices back to the $80 range with a single-day gain of nearly 3%. Within days, the entire polyester chain—from PTA to polyester filament yarn (PFY)—saw prices surge, reversing a prolonged downtrend and even triggering intraday price adjustments.
This geopolitical shock ignited panic buying across the textile raw material market. On July 8, the average sales-to-production ratio for PFY skyrocketed to 361.9%, with the weekly average reaching 132.7%. Downstream weaving mills and traders rushed to replenish inventories, fearing a repeat of the raw material price spike earlier this year.
The Supply-Demand Reality Behind Panic Buying
The buying spree is fundamentally a fear-driven response. It is the traditional off-season, and weaving mills have limited orders with low operating rates. However, memories of last year's violent price swings remain fresh—many mills carry low raw material inventories and worry that if oil prices climb further, PFY prices will follow, leaving them unable to produce.
Yet end-user demand has not shown meaningful improvement. Capacity utilization at the weaving end stands at just 74.6%, lower than a year ago, and inventory pressure persists. The current restocking is largely defensive, not driven by order growth. If geopolitical tensions ease and oil prices retreat, these high-priced inventories could become a new burden.
Supply-Side Tightening Provides Support
The polyester mills' confidence in raising prices stems not only from higher crude costs but also from deliberate supply-side tightening. PFY plant capacity utilization is only 74.6%, with frequent maintenance shutdowns at PTA and PX facilities. This supply contraction makes it easier to pass through cost increases and gives polyester mills a rationale for price hikes.
However, supply tightening is a double-edged sword. While it supports prices in the near term, if end demand remains weak, higher prices will suppress buying interest, eventually leading to passive inventory accumulation and greater downward pressure.
Geopolitical Risk as a New Normal for Textiles
US-Iran relations have historically oscillated between confrontation and negotiation. The current flashpoint stems from Iran's attempt to impose tolls on shipping through the Strait of Hormuz, which the US rejected, leading to military escalation. Although a large number of tankers had already left the strait before the blockade, preventing an immediate global oil shortage, the uncertainty remains high.
For the textile industry, this means raw material cost volatility is becoming a structural feature, not a one-off event. Companies cannot rely solely on stockpiling to hedge risk; they need more flexible pricing mechanisms and inventory management systems.