Middle East war squeezes both polyester and cotton, threatening apparel price hikes

The war in the Middle East is rippling through the global apparel industry, pushing up the cost of raw materials, shipping, and energy in a combination that manufacturers say is unlike previous disruptions. With both polyester and cotton prices climbing simultaneously, analysts project clothing price increases of 10 to 20 percent could reach consumers by next spring and summer.

A Dual Fiber Shock

Unlike past cost cycles, when brands could shift between natural and synthetic fibers to manage expenses, both major textile inputs are now under pressure at the same time. Polyester yarn prices jumped as much as 25 percent within weeks of the conflict's escalation, driven by surging crude oil markets that pushed Chinese polyester prices to a near four-year peak. Cotton futures, meanwhile, climbed to their highest levels since March 2024 as buyers hunted for alternatives, supplies tightened, and fears grew that a powerful El Niño could damage harvests.economictimes+1

"What's unusual in the current environment is that both major fibers are facing cost pressure at the same time," Julian Hügl, a partner at McKinsey & Co., told Bloomberg. "That removes the usual ability for brands to substitute between fibers."economictimes

At Plummy Fashions, a garment manufacturer on the outskirts of Dhaka that supplies Inditex Industria de Diseño Textil, S.A. brands including Zara and Pull&Bear, one production hall continues making T-shirts for European stores while another has sat idle for three months after a buyer put polyester orders on hold. Managing Director Fazlul Hoque told Bloomberg that raw materials account for roughly 60 percent of the cost of a basic T-shirt, while factory margins average just 2 to 3 percent.economictimes

Retailers Brace for Margin Pressure

Inditex said during its latest earnings call that Middle East disruptions had pushed up transport and input costs during the first half of 2026, with the impact expected to continue weighing on gross margins in the second half. The company said it had adapted transportation methods and leaned into a supply network spread across dozens of countries.fibre2fashion+1

British retailer Next warned that if the conflict persists, clothing prices could rise by as much as 10 percent. Hügl estimated price increases in basic apparel categories could eventually reach 10 to 20 percent, though the full impact could take up to a year to materialize. Swedish brand ASKET opted to raise prices rather than reduce quality. "As an independent brand operating with slim margins, we can't simply absorb sustained cost increases," co-founder Jakob Dworsky told Bloomberg.economictimes+2

South Asian Manufacturers Bear the Brunt

The strain is particularly acute in South Asia. India's ready-made garment exports fell 4.5 percent in July from a year earlier, extending a decline that left shipments down 10.5 percent in the first four months of the fiscal year. Bangladesh, which exports roughly $800 million in garments annually to Middle Eastern markets, has seen that trade almost entirely suspended.urbanacres+1

"Buyers don't care that raw material prices have gone up because they have endless options right now," Hoque said. "If I refuse to produce at a loss, someone else will step in."economictimes