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Middle East tensions disrupt chemical market; propylene prices hit nearly seven-year high
Release time:
Mar 19,2026
Report by Chen Jiayun, China Business Journal, Beijing
Entering March, the domestic chemical market has seen a new round of price increases, with propylene leading the gains. Data from Zhuochuang Information shows that taking Shandong propylene prices as an example, the average price climbed from 6,400 yuan/ton on February 28 to 9,750 yuan/ton on March 9, a surge of 52.34% in just 10 trading days, reaching a nearly seven-year high. However, amid volatile market sentiment, propylene prices retreated slightly to 8,673 yuan/ton on March 10.
Zhang Kunkun, an analyst at Zhuochuang Information, told a China Business Journal reporter that geopolitical conflicts have restricted passage through the Strait of Hormuz, pushing up prices of propylene’s upstream feedstocks including crude oil, propane and methanol, while downstream products such as polypropylene, acrylic acid and octanol have risen sharply. Strong cost support and concentrated downstream buying have jointly driven propylene prices higher.
On February 28, military conflicts in the Middle East escalated abruptly, disrupting shipping through the Strait of Hormuz and threatening the security of the global energy supply chain.
“The Middle East is a core production region for global crude oil and propane, as well as a major exporter of key chemicals. The ongoing escalation of this round of geopolitical conflicts has become a key external driver of the sharp rally in propylene prices,” said Zhao Na, an analyst at Sunsirs.
Zhao analyzed that, on the one hand, higher international crude oil and propane prices have lifted propylene costs. On the other hand, rising shipping risks in key waterways including the Red Sea and the Strait of Hormuz have tightened import arrival expectations and raised transportation costs. Growing market concerns over supply shortages have added substantial risk premiums to propylene quotations.
Zhang noted that the propylene rally was driven mainly by cost support, concentrated downstream purchases and shifting supply expectations. Later, escalating Middle East tensions and expectations of tight supplies pushed prices into a steep upward channel.
On the supply side, Zhao pointed out that domestic propylene producers have entered concentrated maintenance, with some units operating at reduced loads, resulting in a notable drop in effective market supply and a clear shortage of spot availability. On the demand side, normal operating rates in downstream sectors including polypropylene and propylene oxide have supported upward price momentum.
Zhang added that downstream propylene derivatives have posted broad-based gains since the outbreak of geopolitical tensions, with some products surging sharply. Meanwhile, some spot and futures speculators entered the market, boosting short-term demand for propylene. Overall, propylene supply has changed little so far, but concentrated early demand release has also fueled a pronounced price rally.
The sharp rise in propylene has now spread downstream, with fine chemicals including polypropylene, propylene oxide, acrylic acid and acrylonitrile rising in tandem.
Sunsirs data shows that as of March 10, the benchmark price for PP (drawn grade) stood at 7,993.33 yuan/ton, up 19.96% from 6,663.33 yuan/ton at the start of March. Over the same period, the benchmark price for propylene oxide reached 11,016.67 yuan/ton, a jump of 37.71% from 8,000 yuan/ton in early March.
Zhang said the trajectory of geopolitical conflicts will remain one of the main factors driving propylene prices in the coming week. A prolonged conflict would lead to feedstock shortages or even supply disruptions at some domestic propylene units, significantly reducing overall market supply. Meanwhile, imported supply relies heavily on Japan and South Korea, which also depend substantially on Middle East feedstocks and face shrinking export availability. A tighter or even short global and domestic propylene supply could then push prices higher again.
Zhang also noted that recent signs of easing in the Middle East have shifted market sentiment. In addition, downstream end-user factories adjust prices slowly, and some plants are cutting operating rates amid losses. Under these conditions, propylene prices face a high chance of correcting lower from current highs, with a projected decline toward the range of 7,500–8,000 yuan/ton.
Zhao Na believes that in the short term, uncertainties over Middle East risks persist, and the tight domestic propylene supply situation is unlikely to ease soon, meaning prices will most likely stay elevated.
Editor: Dong Shuguang
Auditor: Wu Kezhong
Proofreader: Yan Yuxia
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