WPC 2026: China's polymer growth faces test as Iran war lifts feedstock costs

This content is part of a series exploring key themes from the World Petrochemical Conference by S&P Global being held in Houston from March 23-27.

While other regions around the world depend increasingly on polymer imports, such as Europe amid its petrochemical industry rationalization, China's efforts over the years to increase capacity face pressure as rising feedstock costs following the conflict in Iran are set to change trade flows, according to panelists at the WPC March 26..

China has been strengthening its cost position in polymers such as polypropylene, polyethylene, and polyvinyl chloride through capital expenditure efficiency, scale, and diversified feedstocks, while naphtha-dependent producers worldwide feel this pressure.

"China builds large integrated refineries and petrochemical complexes at the world's lowest capital cost," Shaohua Feng, director of APAC polymers at S&P Global Energy CERA, said. "This advantage drives China's competitive position."

Additionally, China has leveraged feedstock diversification, reduced reliance on crude oil by using coal, and rapidly increased capacity.

"There has been a 60% jump in capacity from 2020," Pooja Jain, senior principal analyst at CERA said.

As China gains self-sufficiency, other global exporters must target smaller emerging markets, such as Vietnam, Turkey, Indonesia, India, Malaysia, and Mexico, and anti-dumping duties have emerged as countries aim to protect local producers.

"China's rise is raising protectionism in other countries are now part of our baseline environment," Feng said.

However, in the aftermath of the Iran conflict, China has been facing higher feedstock costs, dampening the opportunity for higher margins amid a global, war-driven supply shock that is driving polymer prices higher.

For instance, the Platts East-West naphtha swap spread, the spread between the CFR Japan naphtha cargo swap and the CIF NWE equivalent, was at $69.25/mt on March 26, out from $48.75/mt on Feb. 27.

"Feedstock costs are higher for Asian and Western Europe producers than North American producers," Jain said. "They can't benefit from margins because of higher feedstock costs."