[Highlights] In late August 2026, the US-Iran standoff over the Strait of Hormuz continued to escalate, pushing international crude oil above $90/bbl. China's domestic polyethylene (PE), polypropylene (PP), and polyvinyl chloride (PVC) markets maintained a range-bound, firm-biased pattern, supported by elevated costs amid weak downstream demand.
1. Futures Settlement (August 25, 2026)
| Product | Main Contract | Settlement | Change |
|---|---|---|---|
| PE (L) | 2701 | 7,802 CNY/t | -16 CNY/t |
| PP | 2701 | 8,098 CNY/t | -1 CNY/t |
| PVC | 2701 | 4,539 CNY/t | -134 CNY/t |
| Styrene | 2610 | 8,888 CNY/t | +106 CNY/t |
Source: DCE, ZCE | Exchange rate: USD/CNY 6.72
2. Key Market Drivers
2.1 Geopolitical Risk: Strait of Hormuz Remains Closed
The US and Iran remain deadlocked over the Hormuz temporary agreement. The US suspended engagement with Iran, while Iran's foreign minister stated Tehran will not resume negotiations as long as Washington continues to violate the prior agreement. Transit efficiency through the Strait of Hormuz stays critically low. Brent crude holds above $90/bbl, with geopolitical risk premiums persistently fueling the energy-chemical complex and providing solid cost support for plastic chains.
2.2 Supply & Demand: Tightening Supply, Peak Season Not Yet Arrived
- PE: Operating rate 75.54% (-3.15% WoW); maintenance loss 164,800 t (+22,400 t WoW), indicating temporary supply tightening. Downstream PE operating rate 35.15% (+0.48% WoW); autumn agricultural film peak season not yet started. Producer inventories 466,500 t, slightly building.
- PP: National average capacity utilization 69.32% (+0.59pp WoW); producer inventories 377,200 t (-6,700 t WoW, -1.75%). Downstream plastic-woven bag operating rate 40.1%, BOPP 47.3%, still in off-season.
- PVC: East China calcium carbide-based Type-5 ex-warehouse 4,500-4,600 CNY/t; ethylene-based 4,850-5,000 CNY/t. Downstream operating rate down 3.52% YoY; high inventory and weak demand persist; Indian buyers adopting wait-and-see stance amid trade policy headwinds.
2.3 Cost Side: Crude Oil Firm, Ethylene Resilient
Brent crude holds above $90/bbl. CFR Northeast Asia ethylene at $1,020/t; CFR Southeast Asia $1,000/t. Carbide: Wuhai region mainstream 2,400 CNY/t, tight supply, providing bottom support for PVC.
3. ABS Breaks 10,000 CNY/t — A Wake-Up Call for Appliance Makers
Driven by the US-Iran conflict escalation pushing upstream styrene and butadiene prices higher, ABS prices broke through 10,000 CNY/t on August 20, 2026. Data from Baichuan shows: +7.48% in 10 days, +4.79% in 5 days, +11.07% in 60 days. PS, PP, PC, and PA followed suit, directly pressuring appliance manufacturers' production costs. AdvanSix announced a 12 US cents/lb price increase on PA, PA6, and PA6/66 copolymers effective August 3.
4. Outlook
Plastic markets face mixed forces: Bullish — geopolitical tensions sustaining crude above $90, plant maintenance reducing near-term supply, low inventories; Bearish — peak season not yet started, terminals resistant to high prices, trade policy uncertainties. Near-term PE/PP/PVC is expected to remain range-bound. Investors should monitor Hormuz negotiations and autumn agricultural film demand launch for directional cues.
Sources: Huatai Futures, Anliang Futures, Guantong Futures, Longzhong, SCI99. Data as of August 25, 2026 close.
