Oil prices continue to rise, plastic futures main contracts rally

Overnight Crude Oil Market Dynamics

◎3/13: The conflict between Israel and Iran continues, and the US may increase its military presence, raising supply risks, leading to an increase in international oil prices. NYMEX crude oil futures 04 contract rose by $2.98 to $98.71 per barrel, a 3.11% increase; ICE Brent crude futures 05 contract increased by $2.68 to $103.14 per barrel, a 2.67% increase. China's INE crude oil futures 2605 contract rose by 39.9 to 754.5 yuan per barrel, and in the night session, it increased by 35 to 789.5 yuan per barrel.

Future market forecast

The blocked state of the Strait of Hormuz remains unchanged, and the supply risk continues. (Bullish)

2. The US, Israel, and Iran have all taken strong stances, with no significant signs of de-escalation in the conflict, and supply risks remain. (Positive)

3. The U.S., Japan, and other countries are about to start releasing their strategic reserves. (Bearish)

II. Macroeconomic Dynamics

Sources sayBoth the US and Iran have no intention of ceasing hostilities, and the Middle East conflict may become prolonged.Israeli Prime Minister Netanyahu released a video to prove he is still "alive," stating he will continue actions against Iran.Israeli military says operations against Iran to last at least three more weeksIran’s foreign minister stated that it has never made any ceasefire or negotiation requests.An Iranian senior commander stated that there are two conditions for ending the war: Iran recovering all its losses and the United States withdrawing from the Persian Gulf.。

◎ Iran stated that the situation on Kharg Island is now under control, and warned that if its energy targets are attacked, it will retaliate in kind by destroying all U.S.-linked facilities in the region.

◎ U.S. Calls on Multiple Countries to Deploy Warships for Escort Duties in the Strait of HormuzSouth Korea, Japan, and France have responded, while the UK said it is discussing related options. The French foreign minister will meet with EU foreign ministers on Monday to discuss a joint naval mission in the Strait of Hormuz. Additionally, UK media reported that some European countries are negotiating with Iran to resume shipping in the Strait of Hormuz, while Italy denied the report.

International Energy AgencyRecord-breaking crude oil reserves will be immediately released to the Asian market, while Europe and the U.S. will have to wait until the end of March.。

The core PCE in the U.S. rose 3.1% year-on-year in January, reaching the highest level since March 2024, with a monthly increase of 0.4% remaining unchanged, both in line with market expectations.The Federal Reserve is expected to keep interest rates unchanged at its upcoming monetary policy meeting next week, and if inflation pressures continue to rise, it may further delay the timing window for resuming rate cuts.

◎ According to data released by the People’s Bank of China, RMB loans increased by 5.61 trillion yuan in the first two months of this year; the increment of social financing scale reached 9.6 trillion yuan, an increase of 316.2 billion yuan year-on-year. As of the end of February, M2 grew by 9% year-on-year, and the outstanding social financing scale grew by 8.2% year-on-year. In February, the average interest rate on newly issued corporate loans and the average interest rate on newly issued personal housing loans were both approximately 3.1%.

The revised data released by the U.S. Department of Commerce showed that the U.S. real GDP annualized quarter-on-quarter growth rate in the fourth quarter of last year was 0.7%, a significant downward revision from the initial value of 1.4%. Additionally, the preliminary figures for U.S. durable goods orders in January were flat, far below market expectations of a 1.1% increase.

◎ The University of Michigan's preliminary Consumer Sentiment Index for March fell to 55.5 from February's 56.6, hitting a three-month low. Consumers expect prices to rise by 3.4% over the next year, below the anticipated 3.7%.

The 2026 fiscal year budget bill was passed in the House of Representatives, and will be submitted to the House of Councillors for deliberation. The total scale of the 2026 fiscal year budget exceeds 122 trillion yen, a historical high. Among them, the defense budget for the first time exceeds 9 trillion yen, also setting a new historical record.

Following a 0.6% decline in December last year, eurozone industrial production fell another 1.5% in January this year, reaching its lowest level since December 2024. Industrial production in major economies Germany, Italy, and Spain all declined compared to the previous month.

III. Plastic Market Morning Update

International crude oil prices continue to rise! Domestic plastic futures' main contracts are up.

The plastic 2609 contract is reported at 8276 yuan/ton, up 2.02% from the previous trading day.

The PP2605 contract is quoted at 8,755 yuan/ton, up 2.03% from the previous trading day.

PVC2506 contract is quoted at 5,914 RMB/ton, up 3.23% from the previous trading day.

The styrene 2605 contract is reported at 10,167 yuan/ton, an increase of 2.74% from the previous trading day.

IV. Market Forecast

PP: Geopolitical tensions are disturbing the cost side, causing international crude oil prices to oscillate at high levels, resulting in significant volatility in the futures market and fluctuating market sentiment. Expectations of production cuts by manufacturers continue to intensify, and some facilities plan shutdowns; maintenance-related output losses remain high, providing strong supply-side support. Downstream buyers, however, strongly resist high-priced materials, purchasing only small quantities to meet immediate, essential demand. The polypropylene market is expected to trade with high-level volatility this week.

PE: In the short term, as more producers halt operations for maintenance, supply pressure is expected to ease, and inventory at the two state-owned petrochemical companies is gradually declining. Downstream factories have largely replenished their inventories earlier, showing resistance to price increases and adopting a cautious, wait-and-see stance. With significant uncertainty in the macroeconomic environment and volatile market sentiment, polyethylene is supported, yet lacks sustained driving force. Therefore, in the short term, domestic polyethylene prices in China are expected to trade broadly sideways this week.

PVC: Affected by the global ethylene supply tightness, there is an expectation of reduced production in the ethylene-based PVC. Combined with the tight supply and rising prices of ethylene, the prices of derivative products in the industry are expected to rise. Looking ahead, if regional conflicts continue, it will likely lead to a decline in production capacity of derivative product companies in Asia and surrounding regions that rely heavily on ethylene. This, in turn, will drive the reduction in production of ethylene-derived products such as PVC. Coupled with the risk of increased costs, the prices of products like PVC are expected to continue rising. If the situation eases to some extent, it may alleviate the market's tense expectations. However, in the short term, the decline in costs of PVC will be limited, and the price of PVC is expected to remain fluctuating around the cost level.