1. Crude Oil Market: Geopolitical Premium Rapidly Evaporating
On May 28, WTI crude oil settled at $87.76/barrel, Brent at $91.70/barrel, both down more than 16% for the month — the largest single-month drop since 2020. The core driver is meaningful progress in US-Iran ceasefire talks: both sides reached a preliminary agreement to extend the ceasefire and ease shipping restrictions in the Hormuz Strait. The strait handles roughly one-fifth of global oil and LNG transport — any easing of restrictions immediately ratchets up market expectations for Iranian crude returning to market. Iran currently produces around 2.5 million barrels/day under sanctions; even conservatively, relaxing sanctions could add 500,000-800,000 barrels/day of exports, a material bearish factor for the already loose supply-demand balance.
2. Chain Transmission: Monomers Follow Lower, Plastic Pellets Weaken
The crash transmission path: Crude Oil → Naphtha → Ethylene/Propylene → PE/PP. In late May, CFR Northeast Asia ethylene fell to ~$850/ton, with propylene following suit. Domestic LLDPE film fell below 8,500 CNY/ton, PP raffia trading in the 8,200-8,400 CNY/ton range. Sci99 data shows the broader chemical sector weak, with 78 of 109 products down (71.56%) and liquid chlorine plunging 33.33%, signaling the chemical industry as a whole has entered a destocking cycle.
3. Outlook: Weak Trend to Persist
In the short term, the US-Iran negotiation trajectory remains the biggest crude oil variable. If a deal is signed, Iranian return expectations could push WTI toward $80/barrel; if talks falter, geopolitical premium returns quickly. The plastics cost-down trend is difficult to reverse short-term. In June, PE/PP maintenance turnaround volume decreases month-on-month, supply pressure increases marginally; demand sits in traditional low season with weak order books. Expected ranges: PE 8,000-8,500 CNY/ton, PP raffia 7,800-8,300 CNY/ton.
