Geopolitical tensions in the Middle East are impacting the global textile supply chain faster than expected. With the Strait of Hormuz and the Bab el-Mandeb both blocked, Brent crude oil's September contract has broken above $100 per barrel, directly pushing up upstream raw material costs for textiles.
Rigid Rise in Raw Material Costs
The ripple effect of surging oil prices is first evident in polyester filament yarn. Over the past two weeks, prices have risen almost daily, with single-day increases ranging from 50 to 200 yuan per ton. While each increment seems modest, the cumulative effect is substantial. Meanwhile, disperse dye prices, after rising 2,000 yuan per ton at the beginning of the month, have now climbed another 3,000 yuan, marking a nearly 50% increase year-on-year.
Upstream chemical fiber and dye companies, benefiting from higher industry concentration, can effectively pass on cost pressures downstream, maintaining their profit margins. However, this transmission mechanism faces significant resistance at the weaving and dyeing stages.
Persistent Weakness in Downstream Demand
The textile market is currently in its traditional off-season, with a clear decline in order volumes. Weaving companies face a dilemma: raw material costs keep rising, but end customers are highly resistant to price increases. Actual transactions still rely on promotional tactics such as "concessions and discounts."
Weaving utilization rates in Jiangsu and Zhejiang have dropped to around 50%, with some factories even opting for early shutdowns. This means that in the short term, weaving companies may not feel the full impact of raw material price hikes, but once polyester filament prices remain high, factories resuming operations will face enormous cost pressure. The dyeing sector is similarly squeezed—dye prices rise continuously, but processing fees cannot keep pace due to the buyer's market.
Supply-Demand Mismatch Intensifies Industry Risks
This round of raw material price increases is not demand-driven but a cost shock triggered by geopolitical events. The rigid rise in upstream costs, combined with weak downstream demand, creates a classic supply-demand mismatch. According to public data from China Customs, such mismatches have occurred before in the textile industry, but this time, compounded by the off-season, the impact could be more profound.
For weaving and dyeing companies, the optimal strategy now is to control inventory risk. Stockpiling at high prices means capital tied up and risk of price drops; but halting production entirely could lead to loss of market share. Industry data shows that a utilization rate of just 50% reflects a "wait-and-see" attitude among companies.