China Petrochemical Prices Surge as PET, Naphtha and Ethylene Jump 50 to 100 Percent

China's petrochemical market has been hit by one of the most severe price shocks in recent memory, with PET, naphtha and ethylene values rising between 50 and 100 percent since late February 2026, according to research published by Goldman Sachs. The rally reflects a sudden tightening of feedstock availability after the closure of the Strait of Hormuz, which normally handles a large share of global crude oil and naphtha seaborne flows toward Asia.

Naphtha, the primary feedstock for Asian steam crackers, has led the move. Singapore benchmark cargoes broke above 1,000 dollars per ton in late March 2026, a level unseen in several years and roughly 60 percent higher than values recorded just one month earlier. Chinese refiners and trading houses, which depend heavily on Middle Eastern barrels, have found themselves competing with South Korean and Japanese buyers for a shrinking pool of available cargoes, pushing landed costs to historic highs.

Ethylene has followed the feedstock rally closely. CFR prices for Northeast Asia climbed to around 1,280 dollars per ton in mid-March 2026, with some market reports citing levels above 1,350 dollars per ton later in the month. In the Chinese domestic market, East China spot quotes crossed 9,700 yuan per ton, the highest reading since April 2022. The cumulative rise versus late February stands near 65 percent for the Chinese market and close to 80 percent across broader Asia.

PET resin, widely used in bottles, packaging film and polyester fiber production, has absorbed the full brunt of the feedstock shock. With paraxylene and monoethylene glycol inputs both reflecting the naphtha and ethylene surge, Chinese PET producers have pushed quotations sharply higher to defend thinning margins. Downstream converters face a difficult choice between passing costs on to beverage, textile and food packaging customers or cutting run rates to wait out the volatility.

The supply side is under visible strain. Domestic Chinese naphtha based ethylene capacity utilization has fallen to around 82 percent, down more than 6 percentage points from pre conflict levels. Several large Chinese producers, including units linked to CNOOC and Shell joint ventures, have reportedly trimmed operating rates by between 10 and 30 percent to manage feedstock scarcity. Coal to olefins and ethane cracking routes retain a cost advantage, but their combined output is insufficient to offset the shortfall from naphtha based crackers.

The downstream pain is spreading quickly. Ethylene based polyvinyl chloride producers in China have entered a phase of heavy production cuts, with daily output at some plants reportedly dropping by more than 15 percent in a single week. Operating rates at several PVC lines have slid toward 60 percent, and industry analysts warn that levels could fall to between 40 and 50 percent if the feedstock squeeze persists into April. Polyethylene, polypropylene and synthetic fiber producers are reporting similar pressure, with force majeure notices multiplying across the region.

The root cause sits outside China. The protracted conflict involving Iran and Western allies, which began in late February 2026, has effectively closed the Strait of Hormuz to commercial shipping. Around 60 percent of Asia's seaborne naphtha imports normally transit this corridor, alongside a significant share of global crude and liquefied petroleum gas. Strikes on energy infrastructure, including facilities in Saudi Arabia, the United Arab Emirates and Qatar, have added to the squeeze by removing physical production capacity from the market.

For Chinese manufacturers, the knock on effects reach far beyond petrochemicals. PET price increases feed directly into beverage bottling, food packaging and textile export costs, pressuring margins for some of the country's largest consumer goods and apparel supply chains. Higher ethylene quotations raise the cost base for automotive plastics, construction materials, medical devices and electronics housings, all segments where Chinese producers hold significant global market share.

The market outlook remains uncertain. Goldman Sachs analysts and other commodity desks suggest that prices will stay elevated as long as Hormuz shipping remains restricted and cracker utilization stays below normal. A partial reopening of the strait or a diplomatic de escalation could relieve pressure, but physical inventories of naphtha and ethylene across Asia are now thin enough that any additional disruption could trigger further spikes. Buyers are rushing to secure alternative barrels from the United States Gulf Coast, though limited very large ethane carrier capacity and long voyage times make this route a partial remedy at best.

Global downstream customers should expect continued volatility in plastics, packaging and fiber pricing over the coming weeks, with sourcing teams reassessing contract structures, inventory buffers and supplier diversification strategies.