Strait Conflict Resurfaces, Crude Oil Stops Falling and Turns Positive! PE, PP, Styrene Slightly Rebound

I. Overnight Crude Oil Market Developments

Iran warned vessels not to use unauthorized strait routes, and market concerns over heightened instability pushed international oil prices higher. NYMEXCrude oil futuresThe 08 contract for WTI crude oil rose $1.58 per barrel to $71.92, a month-on-month increase of 2.25%; the ICE Brent crude oil futures 08 contract rose $1.52 per barrel to $75.26, a month-on-month increase of 2.06%. The China INE crude oil futures 2608 contract fell by 21.1 to 468 yuan per barrel, with a night session increase of 10.7 to 478.7 yuan per barrel.

Market Outlook Prediction

As oil prices rapidly approach the $70 level, it indicates that expectations for the oil price outlook have shifted significantly lower. Concerns over renewed oversupply caused by supply growth are likely to remain the main theme for some time. The market needs time to assess the impact of supply growth on the supply-demand balance after the Strait of Hormuz reopens, while the recovery of demand following the pullback in oil prices also requires further observation. Although the topic of inventory declines has not yet gained momentum, this factor objectively exists. If market panic is sufficiently released during the sharp decline in crude oil and sentiment stabilizes afterward, the oil market may stage an oversold rebound, with inventories expected to become an important bullish driver. Both the supply and demand sides of the crude oil market face substantial recovery potential of several million barrels, and the actual pace of recovery will influence investor expectations. However, this will take time to become clear. After the supply side took the lead in driving a sharp decline, oil prices struggled to stabilize and closed higher. Going forward, the market is likely to enter an oversold rebound and repair phase. Pay attention to timing and participate cautiously.

II. Macroeconomic Dynamics

Middle East situation — ① Islamic Revolutionary Guard Corps warning:Uncoordinated transit through the Strait of Hormuz is unacceptable and dangerous.。

② U.S. media, citing U.S. officials:Iran attacked a cargo ship flying the Singaporean flag in the Strait of Hormuz on Thursday.。

The International Maritime Organization has suspended the evacuation of vessels stranded in the Strait of Hormuz.

4. U.S. Secretary of Energy Wright: Iran's daily crude oil exports are expected to reach as much as 2 million barrels.

⑤ Israeli officialDenies partial withdrawal from the “security zone” in southern Lebanon.Report. Rubio:An agreement in principle is about to be reached between Israel and Lebanon.。

⑥ Iran’s “Persian Gulf Strait Administration” warned vessels not to use unauthorized strait routes.

U.S. media: Iran estimates that annual revenue from fees related to the Strait of Hormuz could reach $40 billion.

2、Apple raises prices on Macs, iPads, and other products., iPhone is not included in the price adjustment.

IBM has released 0.7-nanometer chip technology, which can improve energy efficiency by 70%.

4、Iraq’s Oil Ministry denies considering withdrawing from OPEC.。

5. Vietnam will launch a carbon emissions trading pilot next week, which will continue until the end of 2027.

The UK lowered the planned reduction in steel import quotas from 60% to 51%.

U.S. PCE rose 4.1% year-on-year in May, the highest level since April 2023, while core PCE increased 3.4% year-on-year.All meet expectations.The first-quarter GDP growth rate was revised upward from 1.6% to 2.1%.

8. Federal Reserve — Williams:Expected inflation pressure will ease. The expectation to achieve the 2% inflation target has been postponed to 2028.Goolsbee: Underlying inflation remains too high, and its trajectory is unfavorable. I agree with Warsh’s view that we should avoid fueling speculation about the future path of interest rates; a ruling in the case involving Governor Cook is expected to be announced next week.

9. The Ministry of Commerce responds to the latest progress in China-U.S. economic and trade consultations:The two sides agreed to establish a trade council, under which they will discuss cooperation such as reciprocal tariff reductions.

On the 10th, the State Administration for Market Regulation held the second fair competition symposium for enterprises in 2026.

The central bank will increase the overnight reverse repurchase operation variety in the open market operations on June 29 and June 30.

12. Two departments: StrengtheningControllable nuclear fusion, space power stations, high-temperature superconducting power transmissionTheoretical research and technological innovation.

The Shanghai Stock Exchange has announced the scheduled disclosure dates for the semi-annual reports of listed companies in 2026, among which, China Shipbuilding Industry Corporation Special Gas will be the first to disclose its semi-annual report on July 18.

3. Plastic Market Futures Dynamics

Oil prices posted a hard-fought gain, with WTI crude reclaiming the $70 mark after briefly losing it! The main domestic plastics futures contractRebound rally：

The plastic 2609 contract is quoted at 6,919 yuan/ton, an increase of 0.7% compared to the previous trading day.

The PP2609 contract was quoted at 7,250 yuan/ton, up 1.93% from the previous trading day.

The PVC2609 contract is priced at 4469 yuan/ton, a decrease of 0.53% from the previous trading day.

The Styrene 2608 contract was quoted at 7,380 yuan/ton, up 1.01% from the previous trading day.

IV. Market Forecast

PE: With the traditional off-season for consumption continuing, overall procurement and production activity at polyethylene end-users has cooled, while downstream product manufacturers have slowed their pace of raw material consumption, leading to sluggish inventory digestion across the industry. At present, the futures market lacks effective positive drivers, and overall market news remains relatively muted, making it difficult to revive trading sentiment. The industry as a whole is operating on a relatively weak footing. Against the backdrop of insufficient fundamental support, sales pressure in the spot circulation market is gradually accumulating. To accelerate inventory turnover and ease cash-flow pressure, traders are generally adjusting offers flexibly and offering moderate concessions to facilitate transactions, while overall shipment activity remains slow. The operating atmosphere in the end-product sector remains weak. Overall downstream order volumes are relatively limited, order continuity is insufficient, and there is a lack of concentrated demand growth to provide support. Dragged down by weak order intake, most downstream plants show limited production enthusiasm, with overall operating rates staying at relatively low levels and production schedules remaining conservative. In terms of raw material procurement, companies generally maintain a wait-and-see stance, with weak willingness to actively restock. Purchases are largely limited to small volumes based on daily production needs, and overall trading activity in the market remains subdued. Overall, the main pressure currently facing the polyethylene market is concentrated on the demand side. The weak supply-demand balance is unlikely to improve significantly in the short term, and there is limited room for market sentiment to recover. In the absence of new positive drivers and amid persistently flat end-user demand, the polyethylene market is likely to continue its weak consolidation trend in the short term. Overall rebound momentum is expected to remain limited, with prices mainly fluctuating weakly within a narrow range and the pace of recovery likely to be relatively slow.

PP: The polypropylene market is currently in an overall weak adjustment phase, with clear divergence between bullish and bearish forces on the futures board, while the overall bearish sentiment remains dominant. On the cost side, the pace of production recovery among major Middle Eastern oil-producing countries has been relatively slow, and capacity restoration still requires time, which to some extent has provided phased support to crude oil prices and preserved limited cost support for polyolefin feedstocks. However, as geopolitical tensions continue to ease, market-positive factors have faded quickly. Tensions between the United States and Iran have continued to cool, navigation conditions in the Strait of Hormuz have steadily improved, and the smoothness of logistics and transportation has increased significantly. At the same time, major oil-producing countries such as Iraq are accelerating capacity releases, and the global crude oil supply gap continues to narrow, with most of the geopolitical premium from the earlier period having already retreated. Coupled with dual pressure from the macro environment and the demand side, overall market confidence continues to weaken. Expectations of further Federal Reserve rate hikes are steadily rising, putting pressure on the broader commodities market, while downstream end-user demand has entered the seasonal off-season, leaving consumption momentum persistently insufficient. Willingness to hold inventory across the industrial chain remains extremely low, with both upstream and downstream participants generally avoiding inventory risk. Midstream and upstream traders are actively offering discounts to clear stocks and recover cash, and market selling sentiment is strong. Downstream factories are generally bearish on the outlook and remain extremely cautious in procurement, only following up on small volumes of rigid demand orders as needed. Trading activity in the market continues to decline, and the overall transaction atmosphere remains subdued. Affected by the resonance of multiple bearish factors, polypropylene futures opened lower and weakened further, while spot prices also fell accordingly, and the futures-spot basis gradually narrowed. Overall, the pattern of loosening cost support, ample supply, and weak demand is unlikely to improve quickly. In the short term, the polypropylene market will most likely continue its weak, volatile downward trend, with insufficient momentum for any rebound.

PVC: Futures prices performed poorly during the week, and basis quotations narrowed somewhat. Although pricing against futures had some transactional advantage, no notably good deals were heard of. Downstream buyers mainly purchased on rigid demand, with low procurement enthusiasm, and spot transactions remained sluggish. At present, PVC fundamentals still lack any major factor capable of guiding prices. On the supply side, as maintenance shutdowns gradually come to an end, the slight increase in supply is once again putting pressure on the spot market’s ability to absorb cargoes, while the gradual rise in operating rates for ethylene-based PVC is further exacerbating this situation. On the demand side, support is unlikely to improve meaningfully, as the seasonal off-season persists and there is also uncertainty surrounding shipments. After falling to low levels, current prices have developed a certain degree of downside resistance, leaving limited room for further declines, but it is also very difficult to see any solid upward trend emerge. Overall, PVC spot prices are likely to remain at low levels and fluctuate weakly in the short term.