Middle East tensions to have serious repercussions for India’s textile sector

The escalating conflict involving the US, Israel, and Iran may have serious repercussions for India. For example, a recent unanimous vote by Iran's Parliament to close the Strait of Hormuz would have severely disrupted global oil shipments, sending crude oil prices soaring and, consequently, inflating polyester production costs. The closure would also trigger a steep rise in shipping freight rates, further tightening the supply of various yarns and fibers, including viscose, non-cotton, and cotton.

Indian manufacturers of polyester fiber and raw materials have already introduced substantial price increases in response to the rise in crude oil. Recently, a leading Indian producer hiked polyester staple fiber (PSF) prices by Rs 3.50 per kg, from June 21. Market sources indicate, most spinning mills have begun quoting higher prices with all mills raising polyester yarn prices by Rs 3-4 per kg, building on last week's forecast of an additional Rs 1–1.5 per kg increase by traders.

The price adjustments follow an earlier increase in crude oil prices, triggered by the Israeli attack on Iran. However, the direct US attacks on Iran and Iran’s announced intention to close the Strait of Hormuz - carry even more profound implications for crude oil and the global textile supply chain.

The Middle East conflict could also lead to a steep rise in shipping freight charges, further inflating viscose yarn prices. India's industry relies heavily on imported viscose yarn, primarily from China. A Mumbai-based trader observed that demand has risen ahead of the festive season, and if freight rates increase, imported viscose yarn prices are expected to climb further in the coming weeks.