August 1, 2026 - International crude oil markets closed July with remarkable gains - WTI futures rose 21.83% for the month while Brent crude surged more than 23.59%. On the first trading day of August, WTI settled at $84.67/barrel and Brent at $90.12/barrel, both firmly in the upper price range.
Geopolitical Tensions Ignite Oil Rally
On the early morning of July 29, Iran launched multiple ballistic missiles at U.S. military bases in Jordan, causing a sharp escalation of tensions in the Middle East. The news rapidly reversed a three-day oil price decline. Supported by supply contraction expectations and geopolitical risk premiums, crude oil closed July with strong gains, with WTI rising nearly 22% for the month.
Domestic Fuel Prices Raised
Following the sharp rise in international oil prices, domestic gasoline and diesel prices were raised by 685 yuan/ton and 655 yuan/ton respectively from July 31, bringing 92-octane gasoline up 0.55 yuan/liter. In Beijing, 92-octane gasoline now stands at 7.97 yuan/liter - among the highest levels in recent years.
Plastics Raw Materials: Cost Support Strengthening, Demand Still Under Pressure
PE (Polyethylene)
At the start of August, the plastics sector is exiting the peak maintenance season. Facilities including Zhongtian's LDPE, Yulin Chemical's multi-density unit, and Sinopec Beijing Yanshan's HDPE Line 1 have gradually restarted. Weekly operating rates rose 6 percentage points WoW but remain at moderately low levels, approximately 1 percentage point below YoY. LLDPE spot prices: 8,300-8,550 yuan/ton; LDPE: 9,850-9,950 yuan/ton; HDPE: 7,850-8,200 yuan/ton.
On the demand side, agricultural film orders continue to rise, greenhouse film restocking is underway, and feedstock inventories are below previous-year levels. However, packaging film orders have declined, keeping overall downstream operating rates at the lowest level in recent years.
PP (Polypropylene)
The PP market rose modestly, with futures trading on a firm footing. PP raffia prices increased 0-70 yuan/ton, while PP powder prices rose 25-90 yuan/ton. Futures provided some confidence support for spot prices, but downstream buying enthusiasm remained limited with a predominantly rigid-demand purchasing pattern.
Outlook: August Plastics Market Likely to Trade with Volatility
Supportive factors: Crude oil holds at high levels, cost support is robust; ultra-long-term special bonds continue issuance, macro policy is moderately positive; greenhouse film peak season is approaching.
Headwind factors: Restarted facilities will increase supply pressure; manufacturing PMI remains in contraction territory (49.4% in July); downstream orders are limited and resistance to high-priced feedstock persists.
Overall, August plastics market is expected to trade on a soft note under the interplay of cost support and weak demand. Close attention should be paid to the progress of greenhouse film restocking.
Data sources: SCI99 (Zhuochuang), 100ppi.com, WTI/Brent crude oil settlement prices
