Clothes sold by fast-fashion retailers such as Zara, H&M and others may soon become more expensive as war in West Asia squeezes polyester suppliers and garment makers across India and Bangladesh, Reuters reported.
The closure of the Strait of Hormuz led to a disruption in the supply of refined petroleum products. Polyester, which is made from petroleum derivatives, dominates the textile industry, accounting for 59% of global fiber production. It is used in everything from dresses to sportswear.
With supplies from West Asia cut off, Chinese suppliers have raised prices. As a result, Indian polyester yarn producers pay nearly 30% more for the petroleum derivatives used in polyester production. The disruption hit the apparel supply chain, which is dominated by Asia.
In addition, the fuel crisis has drastically increased the cost of chemicals and dyes. “We are not really able to meet the demands of global orders very fruitfully these days,” Avichal Arya, CEO of Bindal Silk Mills, told Reuters. His company supplies printed polyester fabrics to popular retailers including H&M, Zara, Target, Walmart and IKEA.
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Compounding the problem, many migrant workers employed in factories in Surat—India’s textile hub—had left for their hometowns due to a shortage of LPG cylinders due to the Iran war.
Fast fashion, sneakers can cost more
Cost pressure is likely to shift from suppliers to fast fashion brands that rely on supply chains from Asia with a high proportion of polyester. Although some retailers may be able to absorb the initial shocks due to purchasing stock in advance.
In a statement to Reuters, H&M said it did not see any major disruption in Bangladesh and that it had not seen “any appreciable number of requests from suppliers to adjust orders related to energy costs”.
Several brands, such as Zara, have also switched to using recycled polyester – made from waste plastic bottles – which could help ease cost pressures from oil. However, recycled polyester only accounts for 12% of global polyester production.
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Meanwhile, UK retailer Primark said its spring/summer stock and much of its autumn/winter stock would not be affected as it does not buy energy-related raw materials, which are prone to significant inflation.
In addition to clothing, petrochemical derivatives are also widely used in sneakers, and American retailers have raised the alarm. US footwear distributors and retailers identified 25 oil-based components used in footwear, from synthetic rubber soles to polyurethane foam and adhesives. Its president, Matt Priest, told Reuters: “There is a broad impact across all areas, regardless of where you buy your shoes from.”
However, a Nike spokesperson denied this, saying: “Petroleum-related materials affect the cost of the product.”
Polyester power chain damper
In Surat, half of the 200 industrial looms that weave polyester at the factory have shut down, with production down 50-60% since the conflict began in late February. The sharp increase in polyester yarn prices – about 15% – is expected to be passed on from mill owners to their customers, mainly fabric traders.
Data from Wood Mackenzie shows that the price of polyester staple fiber in India jumped from 100 rupees per kilogram at the end of February to 126.5 rupees a month later. It eased slightly after the Indian government cut import duties on petrochemical raw materials, but remained at 120 rupees as of April 9.
Textile dyeing and printing factories in Surat also started closing for two days a week due to rising costs.
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