A geopolitical conflict in the Middle East is sending ripples through the global fashion industry, with a surge in fossil fuel prices directly impacting the cost of polyester production. The Iran war has led to disruptions in oil supply, causing a significant increase in the price of petroleum-derived feedstocks essential for polyester manufacturing. This has created a squeeze on suppliers across Asia, particularly in India and Bangladesh, which are major hubs for fast fashion production.
Producers like Filatex, one of India's largest polyester yarn manufacturers, are reporting nearly 30% higher costs for key materials such as purified terephthalic acid (PTA) and monoethylene glycol (MEG) due to price hikes from Chinese suppliers and Middle East supply chain disruptions. Avichal Arya, CEO of Bindal Silk Mills, a fabric supplier to major retailers including H&M, Zara-owner Inditex, Target, Walmart, and IKEA, stated that the energy crisis has "drastically" increased the cost of chemicals and dyes. He also noted a shortage of cooking gas, exacerbated by the conflict, has led to a migration of workers from Surat, a key textile center in India, impacting production capacity. "We are not able to actually meet the demands of the global orders very fruitfully these days," Arya told Reuters.
Textile dyeing and printing factories in Surat have been forced to reduce operations, with some shutting down for two days a week, up from one previously, according to Kailash Hakim, president of the Federation of Surat Textile Traders Association. He warned of potential raw material shortages and further factory closures if the situation persists. The price of polyester staple fiber in India saw a substantial jump in March, although it has slightly eased due to government tariff reductions on petrochemical raw materials, it remains elevated.
While major retailers like Zara and H&M have been increasingly shifting towards recycled polyester, which could offer some buffer against oil-driven cost pressures, globally recycled polyester still constitutes a small fraction of total production. This reliance on conventional polyester leaves many in the supply chain vulnerable to the current market volatility. The escalating costs could eventually translate to higher prices for consumers as fast-fashion brands grapple with these increased production expenses.