The impact of instability in the Middle East on plastic prices

The instability in the Middle East will rapidly push up plastic prices through four major pathways: crude oil costs, supply disruptions, logistics blockages, and market sentiment. The short-term fluctuations will be severe, the medium-term will be strong, and the long-term will return to supply and demand fundamentals.

1、 Core transmission pathway (most critical)

1. Soaring cost of crude oil (most direct)

Plastics (PE, PP, ABS, PVC, etc.) are downstream products of petrochemicals, following the sequence of crude oil → naphtha → ethylene/propylene → plastic resin.

The Middle East accounts for 1/4 of global maritime oil trade, and with the closure of the Strait of Hormuz, Brent crude oil can rise by 7% -20% within a few days.

Industry calculation: For every $10/barrel increase in crude oil, plastic costs increase by 300-500 yuan/ton.

The February March 2026 US Israel Iran conflict: Crude oil briefly approached $120 per barrel, ABS increased from $8000 to $13000 per ton (+60%), and PC increased from $11000 to nearly $20000 per ton (+70%).

2. Direct interruption of supply (most rigid)

The Middle East is the world's largest exporter of plastic raw materials

Saudi Arabia, Qatar, Iran, and the United Arab Emirates are core production areas for PE, PP, LDPE, and methanol.

After the conflict:

Qatar has shut down 780000 tons/year of LDPE and completely stopped polymer production.

Dow, Ineos, and others have announced force majeure, canceling orders and controlling inventory.

The shutdown of Abbas Port in Iran has directly impacted China's LDPE imports (15% -20% from Iran).

Approximately 9% of global plastic trade ($26 billion) is at risk of exposure, with Asia (China, India, and Turkey) being the most affected.

3. Logistics and shipping paralysis (amplifying price increases)

The Strait of Hormuz undertakes:

35% of global methanol is shipped by sea, and 90% of Middle Eastern chemical products are transshipped.

After the conflict, the daily traffic volume increased from 124 to 44, with over 150 ships stranded.

Shipping company circumnavigating Cape of Good Hope: voyage+10-15 days, shipping cost x 3-4, war risk+300% -500%.

Result: Delayed delivery, scarce spot goods, traders hoarding goods, downstream panic chasing gains.

4. Market sentiment and futures amplification (helping rise and fall)

Plastic futures (Dalian Commodity Exchange) are highly linked to crude oil, with continuous limit up during the conflict period.

The spot market: 'If you don't buy today, it will be more expensive tomorrow', fueled by the hoarding trend.

When the signal of easing of the situation came out: oil prices plummeted by 7%, and plastic prices fell by more than 600 yuan/ton in a single day.

2、 Price performance at different stages (actual combat in 2026)

1. Short term (0-4 weeks): skyrocketing+severe fluctuations

Trigger: Conflict outbreak → Strait obstruction → Crude oil price jump → Plastic prices rise by 15% -70%.

Features: Daily increase of thousands of yuan, hourly fluctuations, spot market closure, futures limit up.

Case: From February 28, 2026 to March 10, the plastic index in South China increased by 13.34%, ABS+18.3%、PP+16%、PC+15.8%**。

2. Mid term (1-3 months): High volatility+structural shortage

Even if the conflict eases and the device restarts, it will take weeks to months, making it difficult to quickly fill the supply gap.

Logistics recovery is slow, shipping costs are high, and import costs remain high.

Downstream (packaging, home appliances, automobiles) require immediate support, and prices are prone to rise but difficult to fall.

3. Long term (3 months+): Return to fundamentals

The conflict ends, the strait is open, and production capacity is restored → prices fall back to supply-demand equilibrium.

The trend is ultimately determined by global demand, new production capacity, and alternative raw materials.

3、 Impact level: Which plastics are most sensitive?

table

Core reasons for sensitivity of plastic varieties

PE (polyethylene), PP (polypropylene) ★★★★★ Mainly produced in the Middle East, highly dependent on imports, and directly downstream of crude oil

ABS, PC (engineering plastics) ★★★☆ Raw material ethylene/propylene shortage, downstream electronics/automotive demand

PVC (ethylene method) ★★★★ Ethylene supply crisis, domestic operating rate drops to 71%

PVC (calcium carbide method) ★★☆ is less affected by crude oil and has relatively independent costs

4、 Latest status as of March 19, 2026

The situation has slightly eased, with oil prices falling below $90 per barrel and plastic futures rebounding.

However, the Strait of Hormuz is not fully open, and the resumption of petrochemical production in the Middle East is slow, resulting in a tight supply of spot goods.

The domestic ethylene based PVC production rate is 71% (down 6 pct per week), and the raw material inventory is only enough to maintain until the end of the month, with price support.

5、 Summary and Prospect

The instability in the Middle East has a strong impact, fast transmission, and high volatility on plastic prices

Short term focus on crude oil and cross-strait navigation, medium-term focus on supply recovery and logistics repair, and long-term focus on demand and production capacity.

As long as the conflict is not completely resolved and the waterway is not fully restored, plastic prices are prone to rise but difficult to fall, and fluctuations will intensify.