The next unlikely victim of the Iran crisis? Fast fashion

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You might think that missiles flying over the Strait of Hormuz are a world away from your closet full of fleece jackets, leggings and trainers.

In fact, that couldn’t be further from the truth. Most of your wardrobe is made of oil, in the form of polyester, nylon, spandex and other synthetic fibres.

Though the ripples from a petroleum shock propagate more quickly to the prices of petrol, diesel and airline tickets, they have been quietly spreading into the apparel trade, too. The best-value clothes — think that $1 pair of tights from Shein, or $15 coat from Temu — may suffer the biggest impacts.

As with the toilet paper frenzy during the COVID-19 pandemic, and drivers pre-emptively filling their vehicles’ fuel tanks on reports of the US-Israel attacks on the Middle East, the first sign of a supply shock is often panic buying.

So far, that’s been good news for some of the petrochemical companies that supply the fashion trade. Tongkun Group, which produces about 18 per cent of the world’s polyester yarn, expects net income to triple from a year earlier in the six months through June.

That’s likely because apparel firms, fearful of disruption, are bidding up the cost of its products, even as it works through raw materials........

© The Age