Geopolitical Tensions Escalate, Driving Sharp Increases in PE and PP Prices — Core Raw Materials for the Woven Plastic Industry

Futures and Spot Markets Rise in Tandem

From the perspective of market performance, PE and PP futures have recorded notable short-term gains. The plastic 2605 futures contract closed the daytime session at RMB 7,691 per ton, marking an increase of RMB 298 per ton. During the night session, prices climbed further to RMB 7,944 per ton, adding another RMB 253 per ton.
Similarly, the PP 2605 futures contract demonstrated strong upward momentum. The daytime session closed at RMB 7,797 per ton, up RMB 339 per ton, while the night session ended at RMB 8,034 per ton, rising an additional RMB 237 per ton.

Spot markets have followed the same upward trend. Current LLDPE spot prices in major Chinese regions are reported at:
North China: RMB 7,540 per ton
East China: RMB 7,590 per ton
South China: RMB 7,900 per ton
For PP raffia-grade materials, spot prices are approximately:

• North China: RMB 7,650 per ton

• East China: RMB 7,800 per ton

• South China: RMB 7,900 per ton

Across all regions, spot quotations have been revised upward, reflecting strong market sentiment.
Triple Drivers: Costs, Supply, and Demand
The current surge in plastic woven raw material prices is the result of a combined effect of rising costs, tightening supply, and improving downstream demand, with geopolitical conflict acting as the primary trigger.
Cost Pressure from Crude Oil Surge

On the cost side, international crude oil prices have jumped sharply due to Middle East tensions. Brent crude closed at USD 92.69 per barrel, up 8.52%, while WTI crude reached USD 90.9 per barrel, surging 12.21%.
The spike in upstream feedstock prices—including crude oil, naphtha, and methanol—has provided strong cost support for polyolefins, pushing the valuation center of PE and PP significantly higher.

Supply Concerns Intensify
Supply-side risks have also increased. The Strait of Hormuz has reportedly been blocked for eight consecutive days, raising serious concerns about global energy transportation. Market participants remain highly cautious about future supply of crude oil and petrochemical feedstocks.
Domestically, several refineries have begun defensive production cuts, while multiple polyolefin production units have entered maintenance shutdowns. Maintenance-related losses in March have already climbed to the highest level of the year.

Current operating rates show clear declines:
PE operating rate: 86.91% (down 1.05% week-on-week)
PP operating rate: 74.42% (down 1.08% week-on-week)
Meanwhile, rising LPG prices have squeezed PDH production margins to below RMB –1,000 per ton, delaying planned restarts of certain PP units and potentially forcing additional output reductions, further tightening supply.
Demand Enters Seasonal Peak
On the demand side, downstream polyolefin industries are entering the traditional seasonal peak, resulting in stronger consumption.

Recent data indicates:
Average PE downstream operating rate: 40.93% (up 10.4%)
Average PP downstream operating rate: 45.07% (up 8.33%)
The recovery in downstream production has significantly increased raw material demand. At the same time, the rapid rise in feedstock prices has prompted some upstream producers to hold back inventory, creating a supply-tightening effect in the market.
Inventory data further supports the bullish sentiment. Total PP inventories have dropped by 11.97%, with reductions seen across major oil companies, coal chemical producers, independent refineries, and trading inventories.
Market Outlook: Focus on Middle East Developments

Looking ahead, the key variable for market direction remains the evolution of the Middle East conflict and the navigational status of the Strait of Hormuz.
Industry analysts widely believe that until clear signs of geopolitical easing or shipping normalization emerge, PE and PP prices are likely to remain on a strong upward trajectory.
For the plastic Woven Packaging industry, this trend impliescontinued pressure from elevated raw material costs, potentially pushing overall operating expenses higher. Companies across the sector will need to closely monitor geopolitical developments while assessing the sustainability of downstream demand recovery.