Major Impacts
The Iran War and Strait of Hormuz Disruption
Major carriers suspended Hormuz transits in early March 2026 and have not returned, as of late June. War-risk surcharges and displacement port costs are no longer temporary but standard.
The Hormuz disruption has prompted direct freight cost increases on Asian-origin polyester staple fiber (PSF) shipped to the U.S., as well as feedstock cost increases as Gulf-produced MEG becomes harder and more expensive to import into Chinese and Indian plants. The latter is the more significant and persistent of the concerns.
U.S.-China Tariffs and Trade Restructuring
U.S. import tariffs implemented in 2025 have driven significant trade route restructuring for polyester fiber. Global textile trade routes are being rerouted with Vietnam, Bangladesh and India are absorbing production moving away from China, but this creates its own complexity for raw material sourcing.
Chinese Overcapacity
China produces approximately 60% of global polyester fiber. Chinese overcapacity has been the consistent downward pressure on global PSF prices for a decade. Even as Hormuz-driven cost increases push Chinese domestic PSF prices up, the scale of Chinese production capacity means that any price rally is capped by the potential for Chinese producers to release more volume into export markets. China’s polyester exports fell 9.3% year-on-year in May 2026 on demand weakness, not capacity reduction.
PTA and MEG Feedstock Volatility
Polyester is made from two feedstocks: PTA and MEG, both crude oil derivatives, and therefore subject to supply disruption from Middle East geopolitics. The Hormuz situation drove sharp MEG feedstock cost increases in Q1 2026, while PTA costs also firmed on paraxylene feedstock tightness, reversing a softness in both in H2 2025.
What Sourcing Teams Should Do:
Adjust Cost Assumptions
Build a 12–18% petroleum cost premium into any Q4 synthetic fabric cost models. Even if the Hormuz disruption is resolved, it will take time for feedstock costs to return to normal.
Itemize fabric quotes
Separate feedstock surcharges from base fabric prices in all supplier negotiations. With PTA, MEG and energy cost components separate, it will reveal whether supplier increases are proportionate to actual input costs.
Monitor Hormuz tensions
If transit normalizes in Q3, MEG costs should fall relatively quickly and PSF prices will follow within 6–8 weeks.
Rethink regional assumptions
Recalculate the China vs. nearshore vs. domestic PSF cost comparison for each product category. The tariff and freight environment has changed the landed cost equation significantly since 2024.
Secure EU fabric early
For brands with European retail exposure: EU automotive tariffs are adding strain to European synthetic fiber supply chains. Source European fabric inventory earlier than usual for the first half of 2027.
This story originally ran as part of HGI’s 2026 Fiber Outlook Report. To learn more about how geopolitical conflict, shifting trade policy, climate risk, new sustainability regulations and evolving consumer expectations are affecting how natural and man-made fibers are produced, sourced and priced, download the report here.
