Brent crude oil futures broke through the $100 mark for September contracts. This is not a short-term fluctuation but a structural shock to global energy pricing following the simultaneous blockade of two key Middle Eastern chokepoints—the Strait of Hormuz and Bab el-Mandeb. For the textile industry, the rigid rise in upstream raw material costs and persistently weak downstream demand are tearing apart an already fragile transmission chain.
Background
The blockades are not isolated. Iran's Islamic Revolutionary Guard Corps declared control over the Strait of Hormuz and warned of mines on alternative routes. Meanwhile, Yemen's Houthi forces attacked Saudi oil tankers, forcing about 10 vessels to turn back, effectively closing Bab el-Mandeb.
The simultaneous closure of two critical waterways directly pushed up global crude transport costs and risk premiums. Brent crude jumped from $95 on the 22nd to above $100 on the 23rd, a gain of over 5% within 24 hours. For textiles, crude oil is the upstream parent of key raw materials like polyester filament and disperse dyes. Every $10 rise in oil typically adds 800-1,000 yuan per ton to polyester costs.
Industry Impact
Upstream Price Hikes: Gradual but Accumulative
Over the past two weeks, polyester filament prices have risen almost daily, with single-day increases ranging from 50 to 200 yuan per ton. Although each increment is small, the cumulative effect is significant—total gains have exceeded 1,000 yuan per ton over two weeks. Disperse dye prices have surged even more sharply, rising 2,000 yuan/ton at the beginning of the month and another 3,000 yuan/ton later, for a monthly total of 5,000 yuan/ton, nearly 50% higher than a year ago.
Upstream companies, with higher industry concentration, can pass on cost pressure downstream. But downstream weaving and dyeing mills are in the off-season, with orders declining significantly and operating rates hovering around 50%. Some factories have already shut down early. This means downstream firms have neither demand to support price hikes nor inventory pressure to force purchases.
Downstream Dilemma: Can't Raise Prices, Can't Sell at a Loss
Current market transactions rely heavily on discounts and promotions to barely sustain activity. Buyers, with stronger bargaining power during the off-season, are not only refusing to accept higher prices but are demanding further concessions. This "cost left, demand right" scissors gap is squeezing corporate profit margins.
More alarmingly, once the off-season ends and factories resume operations, if polyester prices remain high, weaving mills face a painful choice: lose customers and market share by staying idle, or absorb huge raw material costs by restarting. If this supply-demand mismatch persists, it could lead to industry-wide shutdowns or massive losses.