Energy Crisis Squeezes Asia's Polyester Supply Chain as Workers Flee Surat Textile Hub
Global retailers including H&M, Zara and Walmart face mounting pressure as energy costs and worker shortages hit textile manufacturers
Quick Look
- The global polyester supply chain, dominated by Asia, faces mounting pressure from the energy crisis as costs for chemicals and dyes soar.
- Bindal Silk Mills CEO Avichal Arya reports migrant workers are leaving Surat, India's textile hub, due to cooking gas shortages, threatening global orders.
- Polyester, which accounts for 59% of global fibre production and is derived from oil, faces further risk from potential Strait of Hormuz disruptions.
AI-generated summary
Why It Matters
Polyester dominates global fibre production at 59%, with Asia supplying major Western retailers. The Strait of Hormuz handles roughly 20% of global oil traffic, making any disruption a major supply chain risk.
The pain is being felt across the clothing supply chain, which is dominated by Asia. Avichal Arya, CEO of Bindal Silk Mills, which supplies dyed and printed polyester fabrics to retailers including H&M, Zara-owner Inditex, Target, Walmart and Ikea, said the energy crisis had "drastically" pushed up the cost of chemicals and dyes. Adding to his woes, Arya said a shortage of cooking gas due to the war has driven many migrant workers to leave Surat, a textile hub in India's western state of Gujarat. "We are not able to actually meet the demands of the global orders very fruitfully these days," he said. Made from oil derivatives, polyester dominates the textile industry, accounting for 59 per cent of global fibre production and used in everything from running shorts to dresses. It is directly exposed to the squeeze on refined petroleum products caused by the closure of the Strait of Hormuz. The pressure could eventually move downstream to retailers that rely on Asia's polyester-heavy supply chains, though retailers are shielded from immediate pain by forward buying.
Open Questions
- How long will the worker shortage in Surat persist?
- Will retailers pass costs to consumers?
- What alternatives are being considered?
