OilChem: Middle east tensions disrupt supply chains as China's PP market turns net exporter in Q1 2026

1. Imports contracted sharply as domestic substitution accelerated and geopolitical disruption intensified

China's PP import market showed a clear pattern of lower volumes and firmer prices at the start of 2026. Total imports in January-February fell 13.32% year on year. In February alone, imports dropped to 206,000 tonnes from 307,900 tonnes in the same period of 2025, representing a 33.1% decline. At the same time, average import prices remained above USD 1,000/tonne, at USD 1,020.03/tonne in January and USD 1,010.81/tonne in February, both above the roughly USD 975-1,007/tonne range seen a year earlier.

This sharp contraction was not only the result of faster China's domestic capacity additions and deeper import substitution. Following the outbreak of geopolitical conflict in March, market disruption in the Middle East added a further layer of pressure. As a traditional key source of supply, the region faced logistics disruption, rising freight costs and unstable plant operations, pushing up delivered costs and reducing cargo arrival certainty. This weakened the competitiveness of Middle Eastern material in the China market and prompted downstream buyers to shift toward domestic supply, which offered more stable availability and more attractive cost performance. As a result, China's reliance on imports declined further amid broader supply chain realignment.

2. Exports surged as China filled the widening regional supply gap

China's PP exports expanded rapidly at the start of 2026, with volumes rising sharply while prices moved lower. Total exports reached 534,500 tonnes in January-February, up 30.33% year on year. In January alone, exports jumped to 290,400 tonnes from 171,400 tonnes in the same period of 2025. Although February exports eased month on month to 244,100 tonnes due to the Lunar New Year holiday, the level remained well above that of a year earlier.

Meanwhile, average export prices came under pressure, falling from USD 948.25/tonne in January to USD 933.74/tonne in February, compared with around USD 1,030/tonne in the same period of 2025. This points to a clear volume-led export strategy supported by more competitive pricing.

Looking ahead to March, further escalation in Middle East tensions is expected to disrupt regional production and logistics more deeply. Some plants in the region are projected to cut operating rates or suspend output due to feedstock disruption or transport bottlenecks. At the same time, South Korea, another major East Asian exporter, has seen reduced export availability due to feedstock constraints, limiting shipments to China and nearby markets. Against this backdrop, China is emerging as the main supplier able to fill the gap, supported by steady China's domestic capacity growth, well-developed port infrastructure and competitive pricing. This is expected to push March exports higher again and reinforce China's net export position through the first quarter and beyond.

3. Trade flows are being redefined as China shifts from import dependence to outward supply

Chart 3 Global polypropylene trade flow map, 2025

Source: OilChem

The first-quarter data for 2026 represents more than a simple change in import and export volumes. It points to a deeper shift in China's role within the global polypropylene value chain. For many years, China, as the world's largest PP consumer and importer, relied heavily on supplies from the Middle East and Northeast Asia. This round of geopolitical disruption has accelerated a structural rebalancing.

On one hand, the commissioning of large-scale integrated refining and petrochemical projects, together with the presence of coal-based producers, has strengthened the competitiveness of domestic supply in both cost control and supply stability. On the other hand, amid rising uncertainty across external supply chains, China adjusted trade flows quickly and used its pricing advantage to fill supply gaps created by Middle East disruption and reduced South Korean exports.

This shift from passive participation in international pricing and supply allocation to more active capacity exports and regional balance-setting suggests that China is gaining greater influence over PP trade flows in Asia.

Under the impact of this geopolitical shock, China's polypropylene market has completed a dual shift: deeper import substitution and faster export expansion. The sharp decline in imports and the rapid rise in exports together marked China's transition from a net importer to a net exporter.

Looking ahead, as uncertainty in the Middle East remains elevated and domestic capacity expands further, China's net export position is expected to become more established. This is set to reshape the polypropylene supply landscape across Asia-Pacific and beyond, while also pushing domestic producers to strengthen product differentiation and overseas competitiveness amid a more complex global trade environment.

The 2026 Asia Olefins and Polyolefins Summit will convene in South Korea on June 10-11.

With a focus on new regional opportunities under shifting Middle East geopolitics, the event will examine capacity complementarity, higher-end industrial upgrading and data-driven transformation. Mysteel OilChem welcomes industry leaders across the global value chain to help build a new Asian industrial ecosystem centered on stronger regional circulation and closer cross-border coordination.

Click here for more information and registration.