How Will the 2026 Middle East War Affect China's Plastic Raw Material Prices, and How to Respond?

I. Impact on China's Plastic Raw Material Prices (Triple Impact)

1. Cost Side: Crude Oil Price Surge Leads to Rigid Price Increases Across the Entire Industry Chain

Iran is OPEC's third-largest oil producer and controls the Strait of Hormuz (the passage for approximately 20% of global crude oil and 35% of methanol shipped by sea). The war has disrupted navigation through the strait and halted Iranian exports. Brent crude oil prices have surged from $74/barrel to $85/barrel, a weekly increase of over 15%.

Cost Transmission: For every $10/barrel increase in oil prices, the cost of PE/PP and other plastic raw materials rises by 300-500 yuan/ton. In early March, domestic plastic futures prices hit their daily limit for several consecutive days, and spot LDPE prices rose by as much as 700 yuan/ton in a single day.

Affected Commodities: PE, PP, ABS, and PVC are all under pressure; methanol (upstream of PP) and propane (raw material for PDH-to-PP production) have both surged, further pushing up PP costs.

Logistics: Freight and insurance costs have skyrocketed, with costs passed on. Following the strait blockade, oil tankers were forced to detour around the Cape of Good Hope, increasing shipping time by 40%+, freight rates by 3-4 times, and war risk premiums by 300%-500%.

These additional logistics costs are ultimately passed on to spot prices of plastic raw materials, exacerbating upward pressure on prices.

Industry and Macroeconomic References:

Domestic: March-April is the traditional maintenance season for petrochemical plants, resulting in already tight supply. Coupled with geopolitical shocks, prices are more likely to rise than fall.

International: OPEC+ has limited spare capacity (approximately 2-3 million barrels per day), making it difficult to quickly fill the gap left by Iran. High oil prices may persist for several months.

Policy: Pay attention to national energy supply guarantees, chemical reserves, and import tariff adjustments, and take advantage of support in a timely manner.

In summary, the war with Iran poses a triple threat to China's plastic raw materials market, impacting costs, supply, and logistics. Prices are likely to remain volatile at high levels. Enterprises need to manage risks in the short term, stabilize costs in the medium term, and strengthen resilience in the long term by diversifying procurement, hedging, upgrading technology, and substituting raw materials to minimize the impact.