Crude oil has breached $86, and the Strait of Hormuz is once again a flashpoint, triggering multiple consecutive days of price hikes in polyester filament yarn. The scene looks familiar, but a deep dive into the data and market sentiment reveals a fundamentally different starting point for the textile industry.
Surface Similarity, Underlying Data Shift
On the price front, the rally began earlier this month, reversing a prolonged downtrend. However, inventory structures tell a different story: current POY factory stocks stand at 26.4 days, FDY at 32.5 days, and DTY at 37.3 days—about 8, 7, and 10 days higher respectively than at the beginning of the year. Meanwhile, grey fabric inventories have dropped from 24 days to 17 days.
What does this mean? Upstream polyester links face greater inventory pressure, while downstream weaving mills show lower willingness to stock raw materials. During the peak season in early Q2, mills held large backlogs of orders, so raw material price hikes quickly translated into restocking. Now, in the slack season, operating rates are low, purchasing demand is inherently weak, and the price increase is more a passive cost push than demand-driven.
Industry Sentiment: From Hoarding to Waiting
The breakdown in price transmission is a deeper change. Early this year, when raw material prices surged, many textile firms hoarded inventory, expecting grey fabric prices to follow. But six months of market education have taught the industry a hard lesson: raw material prices can jump in one step, but price transmission to grey fabrics and finished goods requires repeated negotiation, and old stock can barely rise a few cents.
As a result, the entire chain now adopts a 'wait-and-see' approach, reluctant to build positions. This sentiment shift means that even if crude oil continues to climb, downstream support will be far weaker than in early 2023. Polarization will intensify: large mills with orders may have to accept high-priced raw materials, while small mills choose to cut production or shut down.
Macro Variables: Weaker Energy Resilience and Order Shift Risks
Zooming out, the macro backdrop of this geopolitical conflict differs significantly from early 2023. Many countries had depleted crude oil inventories before the latest escalation and have only partially replenished them, leaving overall resilience low. If the Strait of Hormuz blockade persists, the ripple effects of an energy supply disruption will be more severe.
For textile exporters, this brings a double-edged impact: on one hand, some overseas production may be disrupted, accelerating order shifts to China; on the other hand, soaring energy costs could suppress end-consumer demand abroad, or even trigger inflation and financial risks. The probability of black swan events is rising, and companies need to prepare contingency buffers.