How Are Chinese Plastics Companies Affected by the Middle East Conflict?

In these once-in-a-century tumultuous times, our generation is witnessing a great deal of history. On February 28, 2026, the United States and Israel launched military strikes against Iran, which subsequently counterattacked. This region, responsible for 20% of global seaborne oil, has once again descended into chaos. The conflict has directly impacted oil prices and transportation. Like a butterfly effect, through invisible supply chains, the impact spreads to factory floors across China. The effects of this war are rapidly propagating.

When the Middle East conflict is mentioned, many people's first reaction is often: oil prices rise → plastic costs rise. And indeed, that is the result: crude oil prices increase, and plastic product prices follow. For every $10/barrel increase in oil prices, the cost of PE/PP rises by RMB 300-500/ton. As the source of the plastics industry chain, cost-push price increases seem inevitable. This blog therefore analyzes the impact of the war on the plastics industry.

Impact of the Conflict

However, focusing solely on oil prices risks overlooking a deeper structural shock to China's plastics industry from this conflict. Iran is not an ordinary oil-producing country; it is a critical link in China's plastic raw material supply chain. In 2025, China imported 1.125 million tons of polyethylene (PE) from Iran, accounting for 8.39% of total imports. More notably, in the sub-category of low-density polyethylene (LDPE), Iran is China's second-largest source of imports, representing 14% of total LDPE imports. The conflict has already led to port closures in Iran, with market expectations of a 1-2 month supply disruption or shipping delays for Iranian supplies. Spot LDPE prices could consequently jump by RMB 100-400/ton. Given that China's LDPE import dependency remains as high as 50%, this shortfall is unlikely to be fully compensated by domestic production capacity in the near term. Simply put, for downstream processing enterprises, regardless of their order books, higher raw material costs are a certainty.

A "Stress Test" on Costs: The Coexistence of "Hourly Price Changes" and "Order Explosions"

1. Unprecedented Price Surge

   The plastic price surge since March 2026 has been dubbed "historic" within the industry. With petrochemical facilities in Middle Eastern producers like Iran and Saudi Arabia directly threatened by attacks or transportation disruptions, prices of plastic categories that China heavily relies on for imports have spiralled out of control almost instantly.

   • Nylon (PA): Prices jumped nearly RMB 10,000/ton in a very short period.

   • Polycarbonate (PC): Soared from RMB 11,400/ton to RMB 17,600/ton, an increase exceeding 50%.

   • Commodity Plastics (ABS, PP): Used in home appliances and automobiles, ABS prices surged from approximately RMB 10,000/ton to RMB 15,000/ton, a 50% increase.

2. Varying Capacities to Withstand Pressure

   • Small and Medium Enterprises (SMEs): Many small factories lacking inventory or facing tight cash flows have been forced to shut down or reject orders. The extreme volatility of raw material prices means they dare not accept orders for fear of failing to deliver on time or incurring direct losses.

   • Industry Leaders: Surprisingly, some industry leaders have seen "order explosions." The logic behind this: Middle Eastern supply disruptions have led overseas competitors (e.g., in Japan, South Korea, parts of Europe) to halt production or face unstable supply due to raw material shortages. Chinese leading companies, equipped with stable raw material inventories and diversified procurement channels, have instead benefited from this "supply gap," becoming a "safe haven" for global buyers.

Conclusion: We cannot predict what tomorrow holds, but we will always pray for world peace. Wars affect far more than just one aspect; they impact everything. As a plastic manufacturer, Shilongmao is flexibly adjusting its plans to cope with the war's impact. Should we adjust our prices, we will provide timely quotes. If you have any needs, please contact us; we have dedicated personnel ready to serve you.