Rising Knitted Fabric Costs and the Buyer Price Freeze

How yarn, dye, chemical, petrochemical and sea freight inflation is squeezing knitwear manufacturers and exporters in India, China, Bangladesh, Vietnam and other producing countries

1. Overview

Knitted fabric sits at the exposed centre of the apparel chain. It is bought by the kilogram and priced off yarn, it is dyed and finished with energy-intensive processes that depend on chemicals and steam, and it is then shipped in volume to buyers who committed to retail prices months earlier. When fibre, dye, chemical, energy and freight costs all rise together, as they have since late February 2026, a knitwear manufacturer has very little room to manoeuvre.

The trigger was geopolitical. US and Israeli strikes on Iran on 28 February 2026 were followed within days by the effective closure of the Strait of Hormuz to most commercial shipping, by the suspension of Gulf transits by the four largest container carriers, and by the resumption of Houthi attacks in the Red Sea. That combination hit the two things a knitwear chain depends on most. The first is petroleum-derived inputs, because polyester accounts for roughly 59 per cent of global fibre production. The second is the shipping lanes and bunker fuel that carry every input and every finished shipment. Cotton, which would normally offer an alternative, has meanwhile climbed to its highest level since spring 2024, so producers have found no cheap fibre to switch into.

Against this backdrop, buyers have locked in prices for the next three to four months, which means roughly to the end of 2026 and into January 2027. Reports from Dhaka, Tiruppur, Surat and Guangzhou describe the same pattern. Programmes were booked at fixed prices weeks or months ago, retailers have forward-bought or are absorbing what they can, and suppliers who ask for more are reminded that competitors will take the order. The effect is that a cost increase which industry sources put at around 10 to 15 per cent of production cost is being carried by manufacturers whose margins, in the case of Bangladeshi knitwear, are only 2 to 5 per cent.

The impact is uneven across countries. China, with integrated fibre-to-fabric capacity, a coal-based chemical route and diversified export markets, has passed a good part of the cost through and kept its exports growing. India is cushioned by domestic cotton and by tariff relief in the United States, but is living through a sharp cotton and yarn cycle, higher dyeing and processing costs and a weak garment export print. Bangladesh is the most exposed on margins and energy security, even though its headline exports have rebounded strongly. Vietnam, which imports most of its knitted fabric, absorbs Chinese repricing and freight at the same time. Pakistan and Sri Lanka are squeezed mainly through energy. The question for the coming months is not whether the freeze strains the supply base, because it plainly does, but what happens when it expires just as spring and summer 2027 programmes are being priced.

At a glance.  Brent crude was about $104 a barrel on 18 September after a fresh escalation this month. ICE cotton futures have traded above 90 US cents a pound, more than 50 per cent above the February low. Drewry’s composite container index was $4,476 per 40-foot box on 10 September, with Shanghai to Los Angeles at $7,712 on 17 September. Bangladeshi knitwear makers report production costs up 10 to 12 per cent against margins of 2 to 5 per cent. India’s garment exports fell 10.5 per cent in April to July, while China’s textile and apparel exports rose 3.1 per cent in January to August.

2. How the shock unfolded

The sequence matters because cost pass-through in textiles works with a lag of weeks to months. Within days of the strikes, Iran declared the Strait of Hormuz closed to Western-allied vessels, and on 1 March Maersk, MSC, CMA CGM and Hapag-Lloyd all suspended Gulf transits. War-risk insurance was cancelled by more than a dozen International Group clubs from 5 March, and Jebel Ali, the transshipment hub on which many South Asian exporters rely, was reported to be running at sharply reduced capacity. Brent crude briefly reached about $118 a barrel on 9 March before falling back, and by 10 April it was near $96 as US and Iranian delegations prepared to meet in Pakistan.

A US–Iran memorandum in June brought a gradual increase in Hormuz traffic, and for a few weeks the market hoped for normalisation. That hope faded in July, when Iranian attacks on commercial vessels drew large-scale US retaliation and doubts about the ceasefire returned. It has been overtaken this month by a sharper escalation. A drone attack launched from Iraq on or about 10 to 11 September damaged Saudi Arabia’s East-West pipeline, the main bypass around Hormuz. Houthi forces were reported to have taken control of Perim Island in the Bab el-Mandeb, a regional meeting planned in Oman was postponed, and Brent gained more than 16 per cent in September by mid-month before settling at $103.87 on 18 September. JPMorgan estimates that Middle Eastern oil flows are running about 6 million barrels a day below the 2025 average, and the International Energy Agency has warned that the inventory buffers built up since the war began are largely spent.

For the textile industry the practical meaning is that the input-cost peak of March and April has not been unwound, and that a second leg is possible. The cost increases described below should therefore be read as a moving baseline rather than a one-off spike.

3. The anatomy of the cost squeeze

3.1 Petrochemicals and the polyester chain

Polyester is where the oil shock enters the knitted fabric chain most directly. Crude and naphtha feed paraxylene, which becomes purified terephthalic acid (PTA). PTA and monoethylene glycol (MEG) are polymerised into chips and then spun into staple fibre and filament yarns such as POY, DTY and FDY, which knitters use for jersey, interlock, mesh, fleece, performance and blended fabrics. The whole chain repriced within days. Chinese paraxylene averaged about $1,085 a tonne in the first half of 2026, some 30 per cent above a year earlier, after touching $1,346 on 9 March. By late March Indian polyester staple fibre was up about 26.5 per cent while naphtha had jumped by nearly 90 per cent, and Indian producers were passing on fortnightly increases; the mid-March revision alone lifted basic staple fibre by Rs 7 a kilogram to about Rs 126.5. Filatex, one of India’s largest polyester yarn producers, told Reuters in April that it was paying almost 30 per cent more for PTA and MEG as Chinese suppliers raised prices and Middle Eastern supply was disrupted.

Bangladesh saw the same movement. Local polyester staple fibre rose from about 90 cents to about $1.22 a kilogram by early April, filament yarn costs rose by around 32 per cent, and a Dhaka fabric manufacturer estimated that petroleum-based inputs, which make up nearly half of a blended fabric, would lift fabric cost by about 10 per cent. Prices for spandex, lycra and elastic yarns, which matter for knitted stretch fabrics, were also moving unpredictably. In China, seven apparel makers told Bloomberg in the first week of the war that polyester and acrylic had risen by more than 10 per cent and that fibre suppliers were revising quotes once or twice a day. The pressure has not gone away. Chinese polyester filament yarn rose in every grade in the week to 21 August, and CCF Group data show that a typhoon-related logistics disruption pushed China’s PTA operating rate to a record low of 49.5 per cent on 6 August, tightening supply further. CCF also notes that coal-based chemical routes have become more competitive in China as crude has soared, which is one reason Chinese producers are less exposed than their Indian and Bangladeshi customers.

3.2 Cotton and cotton yarn

Cotton would normally be the release valve when polyester spikes, and in the first weeks of the conflict it was: buyers hunted for alternatives and futures moved from about 61 to 63 cents a pound in February to above 70 cents by early April. But the alternative has become expensive too. ICE futures traded above 90 cents in August and early September, the highest since spring 2024 and more than 50 per cent above the February low. A strong El Niño has brought hot, dry weather to the US cotton belt, low prices through 2025 had already cut plantings, and the International Cotton Advisory Committee projects 2026-27 world output to fall about 4 per cent to 24.9 million tonnes against consumption of roughly 25 million. Before the war, polyester traded at about half the price of cotton; the spread has since narrowed to multi-year lows. McKinsey’s Julian Hügl points out that having both major fibres under cost pressure at once removes the usual ability of brands and mills to substitute between them.

Physical markets show the same picture. Bangladeshi spinners reported in April that Better Cotton Initiative cotton had risen from 79 to 94 cents a pound, Brazilian from 74.5 to 83 cents and West African from 70 to 78 cents, while US cotton held near 78 cents. Thirty-count yarn, the workhorse of knitwear, moved from about $2.75 to $3.35 per kilogram within a month, according to the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). In India, a candy of cotton (356 kg) rose from Rs 54,000 to Rs 64,000 in the four weeks to early April and peaked near Rs 69,000, and yarn prices rose by Rs 65 to 70 a kilogram between January and May. The government’s temporary exemption of import duty on cotton, which runs from 1 June to 30 October, then helped bring cotton back to about Rs 63,000 and cut yarn by around Rs 10 a kilogram in early June. That relief is explicitly temporary, and it ends inside the price-freeze window.

3.3 Dyes, chemicals and processing energy

Dyeing and finishing add a large and energy-intensive layer of cost between yarn and finished fabric, and it is here that oil, coal, gas and chemicals come together. Disperse dyes for polyester, reactive dyes for cotton and the auxiliaries used in scouring, bleaching and finishing are all derived from petrochemical or chemical intermediates. Sulphur dyes used for dark shades on cotton and denim depend on imported sulphur, and Indian trade press reported tightening supply in March as Middle Eastern shipments were disrupted. Indian industry estimates in March put dye and chemical price increases at almost 20 per cent and the resulting rise in dyeing-unit costs at almost 30 per cent, feeding into a 10 to 15 per cent rise in overall garment manufacturing cost. The chief executive of Bindal Silk Mills in Surat, which supplies dyed and printed polyester fabrics to H&M, Inditex, Target, Walmart and IKEA, told Reuters that the energy crisis had drastically raised dye and chemical prices and that a cooking-gas shortage had driven migrant workers out of Surat.

Energy is the other half of the processing bill. Wet processing runs on steam, and Surat’s mills burn a blend of lignite and imported coal. The head of the city’s processors’ association said imported coal had risen by as much as 50 per cent since February, with non-coking coal moving from about Rs 6,000 to Rs 9,500 a tonne, and that power tariffs were up about 25 per cent. A resulting proposal to raise processing rates was rejected outright by the traders’ federation on 2 September, which is a small but clear example of the freeze in action: traders insist on last year’s fabric rates while the mills’ costs have moved. In May, Surat’s yarn dyers had already raised dyeing charges by Rs 10 per unit, added a freight charge from 15 May and tightened payment terms to 25 to 30 days with 18 per cent annual interest on late payment, a sign of how stretched working capital has become.

In Bangladesh the issue is availability as much as price. Gas and power shortages have interrupted textile and apparel production in the main industrial belts, factories have compensated with diesel and LPG, and the country’s dependence on imported LNG and fuel makes the dyeing and finishing stage the most vulnerable point in the chain. Sri Lankan fuel prices rose by 35 per cent within the first month of the war, and Pakistan’s July gas reset and captive-power levy have raised the cost of its mills’ own generation.

3.4 Ocean freight and logistics

Freight is the fourth pillar. In the first days of the crisis, Indian exporters reported increases of 300 to 400 per cent on Gulf-linked routes, industry analysts spoke of rises of up to 130 per cent on affected lanes, and increases of 80 to 90 per cent were cited for Indian textile exporters overall by mid-March. Freightos data showed Shanghai to Jebel Ali rates quadrupling from below $2,000 to above $8,000 per container. On the main east-west lanes the response was moderated by overcapacity, but carriers pushed through emergency bunker surcharges of $200 to $500 a box. Maersk said it was bearing about $500 million a month in additional fuel cost and Hapag-Lloyd $250 to 300 million, and both signalled they would pass it on. By late May the Shanghai Containerized Freight Index composite had doubled from its late-February level.

By September the picture is one of elevated, lane-specific costs rather than a spike, as Table 1 shows. Transpacific rates are firming ahead of China’s Golden Week, while Asia to Europe rates have eased slightly. A large-scale return of container lines to the Red Sea now looks unlikely in 2026, so Cape of Good Hope routings and the capacity they absorb remain in place; one ship lessor estimated the effective capacity loss at about 12 per cent. Bangladeshi exporters face a further problem in air freight, because the Gulf carriers on which they rely for time-sensitive European deliveries lost more than half of their cargo capacity, and the roughly $800 million of garments Bangladesh sells to the Middle East each year is almost entirely suspended. For knitwear makers, who ship high volumes of relatively low-value basics, freight matters less as a line in the FOB price than as a driver of delivery reliability. Buyers are shifting towards risk minimisation, and missing a delivery window can be more damaging than a cost increase.

Table 1. Container freight benchmarks, March to September 2026

Table 2. Snapshot of input-cost movements reported by the industry

4. The buyer price freeze and who bears it

Apparel is bought forward. Brands place bulk orders as far as a year ahead, which is why consumers are only beginning to feel the impact this autumn while retailers warn that higher costs will reach shelves in spring and summer 2027. Primark said in April that its spring and summer stock and a large part of autumn and winter were unaffected because it had bought before the war, and the chief executive of its parent noted that buying energy-related raw materials at prevailing prices would mean significant inflation. An industry source said H&M expected price increases from Bangladeshi suppliers and planned to absorb them, while the company itself said it had not seen a noticeable number of supplier requests to adjust orders on energy grounds. Bangladeshi mills describe the other side of the mechanism: export orders are typically booked at fixed prices at least three months ahead and, once confirmed, leave very little room to revise the price.

What is different in 2026 is that demand is soft and options are plentiful. A Dhaka factory supplying Zara told Bloomberg that one buyer had put polyester orders on hold in the hope prices would fall, and that a production hall had stood idle for three months. Its managing director said the company had no leverage because it neither grows cotton nor makes polyester chips, and that a supplier who refuses to produce at a loss is simply replaced. In Tiruppur, exporters said in April that they could not pass on higher yarn costs because prices for current orders had been finalised, and that a yarn increase of Rs 10 to 12 a kilogram would add up to about Rs 6 to the cost of a single knitted garment. In Surat, as noted above, traders insist on old fabric rates.

Some buyers are sharing cost, and a few are raising prices. Two Shein suppliers told Bloomberg they were negotiating for the retailer to bear about half of the increase in chemical fibre prices on new orders, and the Swedish brand Asket chose to raise its retail prices rather than squeeze suppliers or degrade quality. Reports from Bangladesh in late March also described buyers pressing for lower prices and for nearshore production. Manufacturers and consultants now warn that, unless pressures ease, brands may look to reduce fabric weights, simplify designs, change blends or remove product features to offset higher production cost, all of which change the specification and the fabric mix that mills will be asked to supply.

The arithmetic explains why the freeze matters so much. A Dhaka manufacturer told Bloomberg that raw materials account for roughly 60 per cent of the cost of a basic T-shirt and that factory margins typically run at only 2 to 3 per cent; BKMEA puts knitwear margins at 2 to 5 per cent and reports that production costs have already risen 10 to 12 per cent. If costs rise by that amount while the selling price is frozen, the margin is not merely squeezed but reversed. Table 3 shows the sensitivity. The figures are simple arithmetic on the ranges reported by the industry and are illustrative rather than a forecast, because they ignore offsetting factors such as currency depreciation, export incentives, forward yarn purchases, productivity gains and partial cost sharing.

Table 3. Illustrative margin (percentage points of the selling price) if costs rise and the price stays frozen

Where suppliers cannot reprice, they absorb, delay or cut. In Tiruppur, many small and medium units run at only 60 to 70 per cent of capacity because of financial constraints and a labour shortage of around 30 per cent, even though orders from the United States and Europe are abundant. Mills have tightened credit terms, as in Surat. Bangladesh’s spinners have told garment makers that they will pass their own higher costs down the chain, which is the domino effect in practice. Anecdotal reports from Zhejiang describe smaller Chinese mills producing less to avoid loss-making orders, although those accounts come from a single press source and should be treated with caution.

Why the freeze end-date matters.  A freeze that runs three to four months from now expires around December or January, which is when buyers finalise spring and summer 2027 programmes and when yarn, chemicals and freight bought under today’s fixed prices must be replaced at whatever the market then charges. Unless input prices fall before then, the likely sequence is a repricing round in the first quarter of 2027, in which suppliers seek to recover at least part of the 10 to 15 per cent cost increase, followed by retail price rises through the second half of the year. McKinsey estimates that increases in basic apparel could eventually reach 10 to 20 per cent but could take up to a year to appear in full. The sequencing here is this report’s own analytical judgement.

5. Impact by country

5.1 India

India’s knitwear industry is anchored in Tiruppur, which accounts for well over half of the country’s knitwear exports, while Surat dominates polyester fabrics and yarn processing. Indian producers face two cost cycles at once. On the cotton side, yarn rose by Rs 65 to 70 a kilogram between January and May, and Tiruppur exporters say raw material costs including yarn and packaging are 15 to 20 per cent higher, with thread and packaging inflating alongside. On the polyester side, staple fibre rose about 26.5 per cent by late March, dyeing costs rose by nearly 30 per cent, and Surat’s coal and power costs have climbed sharply. The rupee, which traded at around 95 to 96 to the US dollar in mid-September, flatters export revenues but raises the rupee cost of imported PTA, MEG, dyes, sulphur and cotton.

Export data tell a mixed story. Total textile and apparel exports fell 2.2 per cent to $35.8 billion in 2025-26, with March hit by the war. In April to July 2026 combined exports slipped 1.84 per cent to $11.96 billion in dollar terms: garments fell 10.52 per cent to $4.95 billion, while textiles (yarn, fabrics and made-ups) rose 5.38 per cent to $7.01 billion. August was better, with total textile and apparel exports up 16.1 per cent year on year to Rs 29,776 crore and ready-made garments up 6.1 per cent, taking April to August to Rs 1.43 lakh crore, up 10.3 per cent. The gap between the dollar and rupee series largely reflects a weaker rupee, so like should be compared with like.

Tiruppur exporters describe a paradox: order books are strong after the punitive US tariffs of 2025 fell away and India’s trade agreements widened market access, but margins are being eroded by yarn and packaging. They are asking the government to regulate cotton and yarn prices, extend customs-duty exemptions and address the labour shortage. The cotton duty waiver, which expires on 30 October, is therefore a key date for Indian knitwear costs.

5.2 China

China is best placed among the major producers but is not immune. It is both the largest supplier of knitted fabric, with exports estimated at roughly $21 billion in 2024, and the price-setter for polyester filament, PTA and many dyes. Textile and apparel exports rose 1.39 per cent to $145.96 billion in the first half of 2026, with textile products up 3.5 per cent and garments down, and then rose 3.1 per cent to about $203 billion in January to August. China’s imports of yarn and fabric have also risen as mills replenish stocks, and it has offset weaker US demand by expanding elsewhere.

Its advantages are structural. The coal-based route to chemicals makes its feedstock less crude-sensitive, its integrated mills can move cost downstream quickly, and shortage fears were milder at home than abroad. CCF Group argues that low grey-fabric inventory-to-sales ratios in China and the United States allow cost to be passed on and that some textile and apparel orders may return to China as a result. Its exposure is the speed and volatility of pricing: factory owners say fibre quotes change once or twice a day, distributors warn that the final price is known only after an order is placed, and some mills now demand larger advance payments. Polyester producers’ profit recovery depends on de-escalation; CCF notes that if shipping resumes and geopolitical risk eases, cost pressure would abate quickly. Chinese exporters also still face the highest US duty stack among the major producers, with product-specific Section 301 duties on top of the 12.5 per cent tier, and press reports say some garment assembly is moving towards Vietnam and other countries, a shift from which China’s fabric exports to those countries benefit.

5.3 Bangladesh

Bangladesh is the clearest case of a cost squeeze inside a booming export story. The industry is built on knitwear, which delivered $2.15 billion of the $3.88 billion of ready-made garment exports in July, and it depends on imported cotton, imported polyester inputs and imported energy. USDA figures cited in trade press put the country at 526 spinning mills, 990 fabric units and 342 dyeing, printing and finishing facilities. Its cost signals in 2026 have been among the sharpest: 30s yarn from $2.75 to $3.35 per kilogram, polyester staple fibre from 90 cents to $1.22, filament yarn up about 32 per cent, production cost up 10 to 12 per cent, and freight from China to Bangladesh up more than $500 a container on a base of $1,450 to 1,500. One industry figure warned that container rates could return to pandemic-era levels if the conflict persisted.

Energy has been an additional shock. Bangladesh imports the bulk of its energy needs, and factories were hit by diesel shortages in March and April, then by gas and power outages through the summer, aggravated by problems at imported LNG infrastructure. BKMEA leaders say production has been disrupted across industrial belts, while the BGMEA president said in mid-September that no garment factory had yet shut because of the gas crisis. Exports have nevertheless rebounded: after a 0.9 per cent fall in knitwear in July, knitwear grew 14.88 per cent in August and ready-made garments rose 13.92 per cent to $3.89 billion, with exports to the United States up a record 25.65 per cent. Part of that reflects a low base, since August 2025 was hurt by US reciprocal tariffs, and BKMEA’s president has questioned whether the export data match actual production. The lesson is that volume growth is not the same as margin health.

A policy fight adds to the cost uncertainty. Bangladesh has scrapped zero-tariff bonded imports of 10 to 30 count cotton yarn, a move welcomed by local spinners but opposed by the BGMEA and BKMEA, who fear higher costs and lost competitiveness. Yarn imports from India through Chattogram roughly doubled in the last fiscal year, and the BGMEA had earlier modelled a $1.2 billion annual cost for a 20 per cent protective duty on imported yarn, rising to $2.4 billion in a 40 per cent price-escalation scenario. In a freeze in which buyers will not pay more, any additional yarn cost created by policy falls directly on exporters’ margins.

5.4 Vietnam

Vietnam’s exposure is different in kind. It is a large garment assembler that imports most of its fabric, mainly from China, South Korea and Taiwan; fabric imports were $8.94 billion in the first seven months of 2026, up 2.08 per cent, within total textile and garment imports of $15.26 billion. That means Vietnamese garment makers inherit Chinese polyester repricing, freight and any Chinese price volatility with a lag, and have limited ability to hedge. Exports were $22.2 billion in the first half, up 1.7 per cent, but garments slipped 0.4 per cent on weak demand while fibre, fabric, accessory and nonwoven exports grew 5.6 to 10.6 per cent, which suggests localisation is advancing. The United States accounts for about 45 per cent of exports, the European Union was the strongest market with growth of 8.8 per cent, and Japan and South Korea fell 6.2 and 8.9 per cent.

The Vietnam Textile and Apparel Association lists sluggish demand, intense price competition, heavy dependence on imported raw materials and rising environmental and traceability costs as its main challenges, and has asked authorities to stabilise energy and fuel supply to ease input costs. Its chairman says there is little room left to grow simply by producing more, so the industry must move to higher-value products and domestic inputs. On US duties, Vietnam sits in the 12.5 per cent tier against 10 per cent for India, Bangladesh, Pakistan, Sri Lanka and Cambodia, a small but real disadvantage in a market where buyers are refusing to pay more.

5.5 Pakistan, Sri Lanka, Cambodia and other producers

Pakistan’s problem is energy pricing. The All Pakistan Textile Mills Association warned in March of a dual shock from higher energy import costs and weaker export earnings, and the July gas tariff reset and rising captive-power levy have raised the cost of mills’ own generation, with trade press warning that yarn and greige fabric export quotes could firm within weeks. In August the association opposed a proposed fuel price adjustment of Rs 2.52 per kilowatt-hour and criticised the Rs 22.98 charge on incremental consumption, and industry bodies have called for gas at $6 per MMBtu and power at 9 US cents per unit to match regional competitors. Sector commentary describes about $18 billion of textile and apparel exports as being at risk.

Sri Lanka’s fuel prices rose by 35 per cent in the first month of the war, electricity was set to rise about 10 per cent from 1 April, and the government imposed a four-day working week and rationing, although the country’s largest apparel group said the decision to give exporters priority fuel supply had preserved continuity. Sri Lankan apparel exports, which reached a record $5 billion in 2025, fell nearly 12 per cent in the early months of 2026. Cambodia reported a rise of about 20 per cent in transport costs, while the government held electricity prices steady and gave garment workers a temporary transport allowance. Indonesia sits in the same 10 per cent US tier as India and Bangladesh. In Europe, a German maker of polyester-cotton blend fabrics reported cost increases of 5 to 8 per cent, a reminder that cost pressure has reached mills outside Asia. Data for Turkey and some other producers are thin in the sources reviewed, and they are not covered in detail here.

Table 4. Country comparison

6. Trade policy overlay

Tariffs interact with the cost squeeze in ways that help explain why some order books are strong while margins are thin. The US Supreme Court struck down the emergency-powers (IEEPA) tariffs on 20 February 2026, leaving a refund question for importers who paid rates that had reached 37 per cent for Bangladesh, 46 per cent for Vietnam and 49 per cent for Cambodia. A stop-gap tariff expired on 24 July and was replaced by Section 301 forced-labour tariffs of 10 per cent for India, Bangladesh, Cambodia, Indonesia, Pakistan and Sri Lanka and 12.5 per cent for China and Vietnam, plus normal duties, with China also facing product-specific Section 301 duties. The USTR is also proposing a mechanism that would allow limited volumes of textile and apparel imports from some countries to enter at a reduced rate. This tariff relief brings orders back to South Asia and Vietnam, but it also gives buyers a reason to argue that landed costs have already fallen and that suppliers should hold prices. The tariff figures in this section come mainly from tariff-tracking sources rather than official schedules and should be verified with customs advisers before use in contracts.

7. Outlook for the next three to four months

The base case is that the freeze holds through the end of the year while input costs stay elevated. On current evidence, Brent is likely to remain in the range of about $100 to 110 unless there is a diplomatic breakthrough, Chinese and Indian polyester chains stay firm, cotton stays supported by the El Niño and supply deficit narrative, and transpacific freight stays high while Asia to Europe rates drift. In that case manufacturers will keep absorbing costs into December, working capital will tighten further, and repricing requests will arrive with spring and summer 2027 negotiations. Cost increases at the fabric and garment level are likely to be in the range that industry bodies already report, roughly 10 to 15 per cent, with the split between suppliers, buyers and consumers settled only in the first half of 2027.

An escalation case would see Brent above $120, a level Goldman Sachs has flagged as its upside scenario, further disruption around Hormuz and the Red Sea, and renewed spikes in paraxylene, PTA and MEG. Energy rationing in South Asia would worsen, force majeure declarations could return, and buyers might extend holds or move orders towards producers with more secure energy. A de-escalation case, in which Hormuz traffic normalises, would let polyester chain prices unwind within weeks according to CCF, but cotton would stay supported by weather and supply, freight would normalise more slowly because Red Sea insurance and routing are unlikely to recover quickly, and buyers would then ask for price cuts just as suppliers are sitting on expensive inventory.

Watch list.  The main dates and indicators are the Saudi East-West pipeline restart, which Washington says will take days and independent analysts say could take weeks or months; the rescheduled Gulf diplomatic talks; the 30 October expiry of India’s cotton import duty waiver; carrier blank sailings around China’s Golden Week and the Q4 peak season; the December cotton contract and El Niño crop reports; Bangladesh gas supply and its yarn import policy; Pakistan’s fuel adjustment decisions; and any US move to introduce reduced-rate quotas for textile and apparel.

8. Strategic implications

For mills and garment makers, the priority is to shorten the gap between input purchase and price agreement. That means forward cover on yarn and chemicals where affordable, index-linked or step clauses for yarn, energy and freight in new contracts, and shorter validity periods on quotations, particularly for polyester-rich fabrics. Fibre flexibility helps, and recycled polyester, which is about 12 per cent of global production, offers some insulation from oil-linked swings. Energy efficiency in dyeing and finishing, such as heat recovery, low-liquor dyeing and automated dosing, becomes more valuable when steam and power are the marginal cost. Working-capital discipline matters as much as pricing, since tighter payment terms are already being used as a defence in Surat.

For buyers, the freeze is a short-term relief and a medium-term risk. Suppliers absorbing losses may cut quality, reduce capacity, or fail, and buyers that lean on them hardest may find that the cheapest supplier in September is unable to deliver in the spring. Cost-sharing formulas that are transparent and time-limited, such as the half-share arrangements reported by Shein’s suppliers, tend to be more durable than open-ended freezes. For policymakers, the Indian duty waiver, Sri Lanka’s priority fuel supply for exporters and Cambodia’s electricity price hold show what works in the short term; the longer-term issue is that Bangladesh, Pakistan and Sri Lanka remain exposed to imported energy. These points are analytical judgements drawn from the reporting above rather than findings in the sources.