Morning Briefing - 12 Mar. 2026
CommoPlast
Morning Briefing
12 March 2026
Brent: $91.98 (+ $4.18)
WTI: $87.25 (+ $3.80)
Naphtha CFR Japan: + $34
Ethylene CFR NEA: Stable
Ethylene CFR SEA: Stable
Propylene FOB Korea: - $30
Propylene CFR China: - $30
*Data represent closing prices of the previous trading day
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China’s PVC squeeze may be more structural than cyclical
Mounting feedstock constraints and deteriorating production margins are exposing deeper fault lines within China’s ethylene based PVC sector. A wave of operating rate reductions and shutdowns across several producers has already removed a notable slice of capacity from the market, tightening near term supply as the industry approaches the second quarter.
Yet the more telling development lies in the economics. In some cases, producers are finding stronger returns selling upstream intermediates than converting them into finished PVC, shifting incentives away from polymer production and further constraining prompt availability. The result is a market that may be facing more than a routine disruption. If feedstock pressures and margin inversion persist, the sector could enter a period where supply volatility becomes structural rather than cyclical, leaving downstream buyers with far less procurement flexibility in the months ahead.
Feedstock starvation and margin inversion cripple Chinese ethylene-based PVC operations
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Record reserve release buys time, but oil market risks remain
The International Energy Agency (IEA) has authorised an unprecedented 400 million barrel strategic reserve release, its largest ever, as the US-Israel-Iran conflict enters its third week and Strait of Hormuz flows remain severely disrupted. Washington is also contributing 172 million barrels from its Strategic Petroleum Reserves , signalling that stabilising prices and reassuring global markets are now a policy priority.
The math is stark as roughly 20 million barrels per day normally transiting the Strait of Hormuz. Nearly two weeks of disruption has already wiped out an estimated 260 million barrels of supply. The release largely plugs that hole rather than building a forward buffer. Theoretically, the combined emergency stocks of around 572 million barrels buy approximately 16 more days at current loss rates. If the strait stays blocked, a structural supply deficit and durably higher crude prices become increasingly difficult to avoid.
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