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Why the virgin PP raw material price has become so high recently?

The price of virgin polypropylene (PP) has surged dramatically in 2026, with market prices reaching their highest levels in nearly 10 years. The primary driver behind this extraordinary rally is geopolitical turmoil in the Middle East, which has disrupted global petrochemical supply chains and sent raw material costs soaring.

 

The crisis began in late February 2026 when conflict involving the US, Israel, and Iran escalated, leading to shipping disruptions in the Strait of Hormuz. This critical waterway handles a substantial portion of global naphtha and propane exports—key feed stocks for PP production. International crude oil prices spiked to nearly $120 per barrel, while Asian naphtha cracking margins skyrocketed from $108 per ton to over $400 per ton, a more than threefold increase.

 

The cost shock propagated rapidly through the production chain. Oil-based PP production costs climbed to 9,737 yuan per ton, while propane dehydrogenation (PDH) route costs reached 10,763 yuan per ton. Unable to absorb these costs, petrochemical producers responded by cutting operating rates. By late March, PP plant shutdown rates had reached 21%, with major producers like Zhejiang Petrochemical and Fujian Refining reducing loads by 20-30%. China‘s PP operating rate fell below 70%, a historic low.

 

Supply constraints were further compounded by logistics bottlenecks. South Korea, traditionally a major PP exporter, halted shipments as its own feed stock supplies ran short. Japanese and Korean buyers began importing Chinese PP, while Southeast Asian nations waived import tariffs, driving China‘s May net exports to a record 400,000 tons.

 

With inventories depleted and production constrained, PP prices climbed nearly 50% from pre-conflict levels, exceeding 10,000 yuan per ton in major markets. The market has since entered a “reality-check” phase as geopolitical tensions ease, but the structural supply-demand imbalance continues to shape price dynamic.


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