The ongoing conflict involving Iran has sharply disrupted energy shipments through the Strait of Hormuz, sending global oil and chemical raw material prices higher and placing mounting pressure on China’s industrial supply chain.
Prior to the outbreak of the conflict on Feb. 28, roughly 20 million barrels of crude oil passed daily through the Strait of Hormuz—about one-fifth of global oil consumption. Attacks on vessels transiting the waterway have forced many oil tankers to halt operations, effectively bringing one of the world’s most critical energy corridors to a near standstill.
China, the world’s largest crude oil importer, relies on foreign supplies for about 72 percent of its domestic consumption. Approximately 44 percent of those imports originate from the Middle East, with most shipments passing through the Strait of Hormuz.
Fuel Prices Jump Across China
Rising global energy costs have already translated into higher domestic fuel prices. On March 10, China’s National Development and Reform Commission raised retail gasoline prices by 695 yuan ($100.8) per ton and diesel prices by 670 yuan ($97.2) per ton—one of the largest single price adjustments in recent years.
The price increases triggered long lines at gas stations across multiple regions. A resident told The Epoch Times that frequent daily price adjustments have led motorists to rush to fill up, sometimes making it difficult to access stations due to heavy demand.
Chemical Supply Chain Disrupted
Iran is not only a major oil producer but also a key supplier of chemical raw materials, particularly methanol, to Asian markets. Approximately 35 percent of global maritime methanol trade moves through the Strait of Hormuz, meaning disruptions to the route are quickly felt throughout Asia’s chemical supply chain.
Since the conflict began, prices across China’s crude oil and chemical markets have surged, with cost pressures spreading rapidly through the broader industrial chain.
Industries heavily dependent on petrochemical inputs—including plastics, synthetic fibers, and fertilizers—have been among the hardest hit. Rising polyethylene prices, for example, are expected to increase packaging costs across multiple manufacturing sectors.
Chinese media report that prices for several chemical commodities in the country’s domestic futures market have climbed sharply. On March 12, crude oil prices surged more than 18 percent while purified terephthalic acid (PTA) rose over 13 percent.
Other petrochemical commodities, including paraxylene and propylene, each recorded gains exceeding 10 percent.
Meanwhile, the price of dichloromethane jumped from around 1,630 yuan ($236) per ton to approximately 2,800 yuan ($406) per ton—an increase of roughly 70 percent.
These rising input costs are squeezing companies throughout the supply chain. Midstream polyolefin producers are facing losses due to higher feedstock prices, while downstream manufacturers must decide whether to absorb the additional costs or pass them on to consumers.
Chemical raw materials typically account for between 10 percent and 20 percent of production costs in industries such as home appliances and automotive manufacturing.
Analysts say that as upstream price increases continue to filter through the supply chain, prices for finished goods may gradually rise.
Plastics Market Shows Signs of Panic Buying
One sector experiencing particularly sharp pressure is plastics manufacturing.
The Zhangmutou Plastics Trading Market in Dongguan, Guangdong Province—one of China’s largest plastics trading hubs with annual transactions nearing 100 billion yuan ($16 billion)—has become a key indicator of market volatility.
Qian Fucheng, a polymer technology company executive in Guangdong speaking under a pseudonym for safety reasons, told The Epoch Times that the market experienced a wave of panic buying shortly after the conflict began.
“At the beginning, many manufacturers had insufficient inventory, and the demand for restocking surged,” he said. “Warehouse shipments suddenly increased, and long lines of trucks formed waiting to load goods, even causing traffic congestion.”
According to Qian, the rapid price increases are severely affecting downstream manufacturers.
“The prices of common raw materials have nearly doubled, which has dramatically increased production costs for downstream companies,” he said. “Some enterprises may even face the risk of losses.”
Prices for key plastic inputs have risen sharply since the conflict began.
By March 12, ABS plastic had climbed from roughly 8,000 yuan ($1,160) per ton to more than 13,000 yuan ($1,885), a gain of over 60 percent. Polycarbonate (PC) plastic rose from about 11,000 yuan ($1,595) per ton to more than 16,000 yuan ($2,329), an increase exceeding 40 percent.
These materials are widely used in consumer products such as mobile phone and laptop casings, keyboards, vacuum cleaners, automotive interior components, safety shields, toys, and food storage containers, as well as packaging materials.
Wu Tiexing, head of a packaging materials company in Zhengzhou, Henan Province, said midstream processors are facing significant financial strain.
“Upstream manufacturers have raised prices substantially, and those costs are passed down layer by layer,” he said. “Mid-range processing companies like ours now have almost no profit margin.”
He added that extreme price volatility is making it difficult for companies to plan production.
“Raw material prices are changing almost daily,” Wu said. “Many companies are afraid to stockpile goods, and some have even suspended raw material purchases to wait and see.”
Methanol Market Tightens
In addition to plastics, the methanol market is also under pressure. Methanol prices rose to 2,811 yuan ($408) per ton on March 13, marking a 6.08 percent increase from the previous day and a 25 percent rise over the past month.
Although China has a methanol production capacity of roughly 118 million tons, the country still imports between 12 percent and 15 percent of its consumption. Around 60 percent of those imports come from Iran, making supply disruptions particularly significant for the domestic market.
Industry observers say continued instability in the Strait of Hormuz could further tighten supply and intensify price volatility across China’s petrochemical and manufacturing sectors.
