I. Crude Oil Retreats from Highs, Cost Support Loosens
On May 21 settlement, WTI July 2026 contract fell $1.91 to $96.35/bbl (-1.94%); Brent fell $2.44 to $102.58/bbl (-2.32%). China SC crude oil main contract 2607 fell 26.8 yuan to 656 yuan/bbl. PX paraxylene futures main contract settled at 9,192 yuan/ton, down 122 yuan from prior settlement; FOB Korea at $1,159-1,161/ton.
From a macro perspective, tightening liquidity expectations combined with gradual easing of geopolitical tensions have caused partial unwinding of the previous crude oil risk premium. Since early May, crude has held at elevated levels, significantly compressing downstream chemical margins. This correction is both a technical pullback from overbought levels and a stress test of downstream demand absorption capacity.
Polyolefin Cost Support Assessment
| Product | Price/Data | Change |
|---|---|---|
| WTI Crude | $96.35/bbl | -1.94% |
| Brent Crude | $102.58/bbl | -2.32% |
| SC Crude Main | 656 yuan/bbl | -26.8 yuan |
| PX Futures | 9,192 yuan/ton | -122 yuan |
Cost Transmission Logic Analysis
- Oil price transmission path: Crude to Naphtha to Ethylene/Propylene to PE/PP; the chain has a 3-5 business day lag, and spot markets have not yet fully reflected the oil decline.
- Margin compression logic: High upstream raw material costs with insufficient downstream demand have already compressed olefin margins to relatively low levels. Oil decline theoretically benefits midstream margin recovery, but demand cooperation is needed.
- Futures lead the way: SC crude futures have broken below 660 yuan support; PX fell in sync; polyolefin futures trended weak overnight, signaling eroding confidence in cost-side support.
II. Plastic Woven Market: Spot Narrowly Fluctuates, Regional Divergence
Yesterday, plastic woven raw material prices showed a slightly warm tone. PP granule and PP powder prices rose slightly; LLDPE film material prices dipped slightly, with overall price fluctuation range of 0-55 yuan/ton, quite narrow. Futures market trended weak sideways, with most participants adopting a wait-and-see stance.
From the value chain perspective, the core contradiction facing the plastic woven industry is: downstream factories hold low raw material inventories, but finished goods offtake speed is only moderate, limiting restocking enthusiasm constrained by order visibility. Currently, East China and North China prices have started diverging -- East China traders are holding firm due to futures discounting spot; North China faces growing supply pressure as imported cargoes arrive.
Liquid Chlorine and Argon Linkage: Chlor-Alkali Cost Side Fluctuations
Notably, liquid chlorine markets linked to the plastics value chain saw regional rallies. Shandong liquid chlorine mainstream delivery price rose 25-50 yuan/ton to 150-350 yuan/ton; Hebei and Northeast followed with 50 yuan/ton increases. This reflects chlor-alkali plant maintenance causing temporary supply tightness, not demand-driven.
For liquid argon, East China and Central China prices were steadily strong; Shandong quoted 650-780 yuan/ton, southern Jiangsu high-end at 1,000-1,130 yuan/ton; low inventory across regions with improving stainless steel argon demand. Liquid argon strength corroborates marginal industrial demand improvement, providing positive reference for plastic woven operating rate expectations.
III. Market Outlook
Synthetically, the crude oil retreat and loosening cost support is the most critical variable for the plastics market currently. In the short term, cost-side headwinds will gradually transmit to spot markets; PE East China benchmark may test 8,500-8,700 yuan/ton support, while PP raffia may retreat to 7,500-7,700 yuan/ton. However, with domestic petrochemical inventories still relatively low, deep decline space is limited. Before June, the market is likely to trend weak with fluctuation.
