After the Middle East conflict, instead of grabbing rice or oil, convoys of trucks came to Dongguan to grab plastics.

Editor’s Note: At the beginning of 2026, the outbreak of war in the Middle East is crossing traditional geographical boundaries, reshaping the global capital landscape and reconstructing the risk pricing logic of global capital with unprecedented intensity. From the shutdown of oil tankers in the Strait of Hormuz to liquidity black holes surging on Wall Street, the “butterfly effect” of the conflict is triggering shocks across various asset classes.

Macroeconomic cycles and geopolitical tensions are colliding head-on, testing the resilience of every market participant. In response to this complex systemic shock, Tencent Finance launches the series “The Global ‘Bill’ of the Middle East War,” reviewing supply chain disruptions and market volatility, shifting oil pricing centers, reallocation of safe-haven funds into precious metals, Federal Reserve policies balancing inflation and recession, and Dubai’s asset revaluation as a regional safe haven. Through ongoing in-depth observation, we aim to clarify macroeconomic trends and asset evolution logic.

By Gu Lingyu

Edited by Liu Peng

Although Trump’s suggestion that “the war is nearing its end” caused oil prices to retreat from highs, statements from Iran and Israel keep the Strait of Hormuz—this global oil artery—under blockade. “A prolonged war” expectations are spreading, and the butterfly effect of Middle East conflict is rapidly propagating along the industrial chain into China’s manufacturing heartland.

Over the past week, China’s largest plastic bulk spot trading market in Dongguan’s Zhangmutou Town has seen continuous traffic congestion: dozens of heavy trucks, each over ten meters long, are lined up for hundreds of meters. Trucks arriving in the morning are still waiting for unloading tickets late into the night.

An industry insider said he has never seen such a scene in 15 years of his career.

The root cause is the Middle East conflict. Plastics, as typical intermediate goods, have upstream oil and downstream electronics, automotive, home appliances, and other factories. Recently, the US-Iran conflict caused oil prices to surge, putting pressure on the entire industry chain.

On March 9, WTI crude oil hit a high of $119.48 per barrel, and Brent crude reached $119.5 per barrel, about 78% higher than before the conflict. In the chemical market, domestic trading prices from JinTou.com show that polypropylene (PP) main contract PP2605 hit the daily limit, closing at 8,034 yuan/ton, up 454 yuan/ton; polyethylene (PE) main contract Plastic 2605 closed at 7,944 yuan/ton, up 449 yuan/ton.

Is this surge in demand real, or just panic buying? How long will it last? What impact will it have on the supply chain?

On March 9, when Tencent News’s “Periscope” inquired locally about the reasons for the rush, a veteran local businessperson in Dongguan said that the plastic rush in Zhangmutou is largely driven by speculative stockpiling by traders motivated by rising prices in the short term. However, if the Middle East conflict cannot be alleviated soon, plastic prices will fluctuate upward.

In other words, although fundamentals are manageable, when emotion-driven bubbles meet overcapacity realities, a supply chain risk is quietly brewing.

01, “A Cannon Shot, Gold Rises Ten Thousand Taels”

The congestion in Zhangmutou is highly related to its industry status.

This town, covering 118 square kilometers and home to nearly 8,000 plastic market entities, is China’s largest spot trading market for plastics, with annual throughput exceeding 7.5 million tons and annual transaction scale surpassing hundreds of billions of yuan.

In other words, Zhangmutou is a barometer of China’s plastics trading, but the sudden surge in stockpiling caught everyone off guard.

A local Dongguan business association member said that the local plastics industry was stunned; when the traffic jam started, “everyone was investigating the cause from top to bottom.”

On February 28, the US and Israel launched joint military strikes against Iran. The conflict directly threatens the global energy transport artery—the Strait of Hormuz. This strait accounts for about 20% of global oil supply and 27% of seaborne crude oil trade, with over 80% heading to Asian markets. More critically, over 60% of Asia’s naphtha imports depend on the Middle East.

International oil prices surged accordingly. By March 9, NY crude futures briefly broke $115 per barrel, a 78% increase from $67.02 on February 27 before the conflict.

Crude oil is at the top of the petrochemical industry chain. The entire chain has begun to fluctuate. Price surges along the “crude oil—naphtha—olefins—plastic raw materials” chain are rapidly transmitted downstream.

Asia’s petrochemical market heavily relies on Middle Eastern naphtha supplies. The blockade of the strait causes a crisis in raw material supply for cracking units across Asia. South Korea’s YNCC and Indonesia’s Chandra Asri petrochemical producers have announced force majeure, with several units facing reduced operation or shutdown risks.

Under the dual expectations of rising costs and shrinking supply, China’s chemical futures markets responded first. From March 2 to 4, futures contracts for methanol, pure benzene, propylene, ethylene glycol, polypropylene (PP), and plastics all hit daily limit-ups.

Spot markets followed suit. LDPE, a common plastic bag raw material, surged 18.92% in just a few days, with a rise of 1,633 yuan per ton; ABS, PC, and other raw materials increased by over 40%.

Global chemical giants also issued price increase notices. Wanhua Chemical, BASF, PetroChina, Sinopec subsidiaries all announced price hikes.

Against this backdrop, traders in Zhangmutou see an opportunity to profit.

02, Hidden Concerns Behind Pricing Power

To understand Zhangmutou’s capacity and influence in this global supply chain storm, one must first recognize that Zhangmutou is not just a traditional distribution hub but an industrial cluster.

The local area hosts over 900 petrochemical factories from more than 60 countries and over 3,000 new material manufacturing enterprises nationwide, covering more than 300 varieties and nearly 100,000 models of plastic materials. Key materials like “low-smoke, halogen-free flame-retardant polypropylene” produced locally already hold over 70% of the global market share.

Essentially, this active spot trading and cluster effect give it bargaining power when facing sudden shortages and urgent reallocation needs.

Over the past week, the Zhangmutou trading market has seen extreme phenomena such as dealers hoarding and raising prices, with “hourly price changes.” Overall market quotes have already surpassed the high points of nearly five years.

Traders worry prices will rise further, prompting them to stockpile and hoard. Downstream manufacturers—including electronics, home appliances, and packaging factories—fear rising raw material costs and rush to buy in advance.

This herd mentality driven by “buying on rising prices and panic stockpiling” has led to a flood of orders into Zhangmutou in a short period. Coupled with the post-Lunar New Year replenishment cycle, rainy weather in Dongguan in early March, and the concentration of trucks heading to Zhangmutou, this has caused major congestion on main roads.

In 2024-2025, China’s chemical industry is at a peak of capacity expansion, facing severe overcapacity pressure. While demand from new energy, automotive, and other sectors has grown somewhat, overall domestic demand remains relatively stable without explosive growth.

In other words, the rise in chemical prices is real, but the current rush and hoarding are more driven by emotion.

03, Upstream Benefits, Downstream Woes

On March 9, the Dongguan Plastic Industry Association responded to Tencent News’s “Periscope,” stating that local suppliers are engaging in short-term price testing and frequent quoting adjustments. However, the association emphasized that the Iran geopolitical conflict mainly causes short-term cost disturbances and emotional fluctuations, with supply fundamentals remaining stable. Local logistics have already returned to normal, and market pickup, loading, and transportation are operating normally.

According to their survey, Dongguan’s raw materials mainly come from domestic refining, Middle Eastern non-Iranian regions, and Southeast Asia. Iran’s share is low, with no substantial supply disruptions—only minor disturbances for some grades.

The association believes that the conflict has not impacted core supply channels, and short-term price fluctuations are controllable. The medium- and long-term supply-demand pattern remains stable.

However, fundamentals are manageable, but risks are accumulating.

An industry insider from Dongguan’s plastics sector told Tencent News’s “Periscope” that upstream petrochemical companies are opportunistically raising prices and seeking irrational profits. Downstream manufacturers, facing order shortages and weak demand, generally adopt a wait-and-see attitude toward high-priced sources, with no substantial increase in overall demand.

He warned that a large amount of high-priced inventory is accumulating at trading levels, combined with widespread short positions, rapidly increasing market risks, and the potential for liquidity chain breaks and concentrated defaults.

A PET raw material merchant said raw material prices have not fluctuated so violently in years; everyone wants to seize this wave. Another industry expert expressed concern, “I don’t know how long this trend can last.”

On March 9, CCTV reported that Iran’s parliamentary speaker Kalibaf said that if the current conflict further expands to infrastructure, its economic impact will last longer regionally and globally. Under such circumstances, international oil prices could remain in triple digits for a considerable period.

Unlike the upstream excitement, downstream manufacturers are anxious. Plastic is a fundamental raw material across manufacturing industries, and price fluctuations have strong industry chain transmission effects. Packaging, home appliances, automotive, courier, and daily necessities sectors will all face cost pressures.

They are aware that upstream traders are speculating and hoarding to push prices higher, yet they cannot help but worry about their slim profits. Some downstream firms have already received notices of 30% raw material price increases and are preparing to communicate price hikes to their clients.

Series of Articles

Why Did Trump TACO? Oil Prices Surge, and the U.S. “Bulls and Horses” Refuse to Back Down

Missile Strikes Dubai’s “Safe Harbor”: Wealthy Evacuate by Charter, Real Estate Turns Down

U.S.-Israel Bomb Iran, Entering the “Hormuz Moment”: Investors Face New Challenges

Prolonged U.S.-Iran Conflict Worries Rise: Wall Street “Abandons Stocks for Oil,” Market Conditions Worsen

Mariners Experience 72 Hours of Hormuz Blockade: Oil Tankers Stranded, Freight Rates Quadruple

Oil Prices Hit $100, BlackRock Limits Redemptions: As Stagflation Risks Emerge, Traders Grow Anxious

Wall Street Repeats 2008 Crisis? Iran Missiles Trigger Liquidity Tests at Top U.S. Financial Institutions