A huge explosion at an Iranian port! Is the high-pressure price about to change?
2025-04-29
Incident: At noon local time on April 26, 2025, a fire broke out at the Shahid Rajah Port, which is located outside the Bandar Abbas Port, the capital of Hormuzgan Province, Iran. The fire caused a violent explosion. According to the customs, the source of the explosion might have originated from "a dangerous goods and chemicals warehouse at the port". Due to the extremely high intensity of the explosion, it caused extensive damage to the port. At about 1:00 p.m. on April 27, 2025, the fire in Bandar Abbas, Iran, continued to spread and some containers exploded again.
The Shahid Rajah Port in Bandar Abbas, southern Iran, is close to the strategic passage of the Strait of Hormuz. It is Iran's most advanced container port, one of the country's major shipping bases, and also one of the most important ports in Iran. The average annual cargo throughput of Shahid Rajah Port exceeds 75 million tons, accounting for more than 55% of Iran's total import and export cargo volume. This port also undertakes approximately 70% of Iran's maritime transportation and at least 85% of its container business. In addition, this port also undertakes more than 85% of the container handling tasks in Iran.
As a key global energy transportation route, any slight movement in the Persian Gulf will affect international oil prices. After the explosion, Brent crude oil futures rose by 1.5% in response, reflecting the nervousness in the market. A more far-reaching impact: Non-petroleum products that Iran exports to Asian countries such as China and India through this port will face severe delays.
Iran has been one of the main sources of polyethylene imports for our country for many years. The polyethylene supply from Iran is relatively cost-effective compared to domestic and some importing countries, and is more favored by domestic factories. Among the polyethylene imported varieties from Iran, the high-pressure variety has a greater influence on the Chinese market. In 2024, Iran's imports of high-pressure products reached 552,900 tons, accounting for 18.7%, ranking first among all sources. Due to the relatively high reliance on imported materials for high-pressure products, after the incident, the market expected a reduction in supplies from Iran. Coupled with the approaching May Day holiday and the downstream's active stockpiling, under the influence of sentiment, the market's speculative atmosphere was obvious, and prices rose sharply. From the perspective of domestic RMB market prices, on the 28th, under high pressure imports, the price of Iranian LFI2119 rose by 150 to 9,450 yuan per ton, and the price of Iranian 2102TX00 increased by 100 to 9,500 yuan per ton. Driven by the resource prices in Iran, the price of domestic Daqing Petrochemical 2426H rose by 150 yuan per ton to 9,450 yuan per ton, and the price of Shanghai Petrochemical N210 increased by 250 yuan per ton to 9,400 yuan per ton.
Enterprise wechat screenshot _17458262007623.png
Table 1: Price Fluctuations of Some LDPE in China Plastics City (Unit: Yuan/ton)
Despite concerns over supply disruptions in the future, there are still some issues to be addressed at present. Domestic resource supply remains abundant. As of April 23, 2025, the inventory of high-pressure social sample warehouses increased by 3.73% month-on-month and 33.05% year-on-year. The inventory of high-voltage production enterprises was 114,500 tons, an increase of 15.9% compared with the beginning of the month (98,800 tons). Due to the high pressure of inventory clearance, merchants have been actively offering discounts and selling goods since March. The Iranian port incident has led to an increase in the price of imported materials, and there are also concerns that the arbitrage window may close due to the narrowing of the price gap between domestic and foreign markets. From the demand side, the current period is a traditional off-season. The operating rate of domestic high-pressure downstream has dropped to 37.45%, a decrease of 1.38% compared to the previous cycle. The overall operating rate of agricultural films is -4.00% higher than the previous period. Orders have decreased, providing limited support for raw materials.
To sum up, the impact of unexpected events at Iranian ports has provided a short-term boost to sentiment. However, as the port situation gradually improves, the pressure of high inventory, the persistence of the off-season for demand, and the reduction in post-holiday purchasing activities, the upward trend may not be sustained in the long term.
The Shahid Rajah Port in Bandar Abbas, southern Iran, is close to the strategic passage of the Strait of Hormuz. It is Iran's most advanced container port, one of the country's major shipping bases, and also one of the most important ports in Iran. The average annual cargo throughput of Shahid Rajah Port exceeds 75 million tons, accounting for more than 55% of Iran's total import and export cargo volume. This port also undertakes approximately 70% of Iran's maritime transportation and at least 85% of its container business. In addition, this port also undertakes more than 85% of the container handling tasks in Iran.
As a key global energy transportation route, any slight movement in the Persian Gulf will affect international oil prices. After the explosion, Brent crude oil futures rose by 1.5% in response, reflecting the nervousness in the market. A more far-reaching impact: Non-petroleum products that Iran exports to Asian countries such as China and India through this port will face severe delays.
Iran has been one of the main sources of polyethylene imports for our country for many years. The polyethylene supply from Iran is relatively cost-effective compared to domestic and some importing countries, and is more favored by domestic factories. Among the polyethylene imported varieties from Iran, the high-pressure variety has a greater influence on the Chinese market. In 2024, Iran's imports of high-pressure products reached 552,900 tons, accounting for 18.7%, ranking first among all sources. Due to the relatively high reliance on imported materials for high-pressure products, after the incident, the market expected a reduction in supplies from Iran. Coupled with the approaching May Day holiday and the downstream's active stockpiling, under the influence of sentiment, the market's speculative atmosphere was obvious, and prices rose sharply. From the perspective of domestic RMB market prices, on the 28th, under high pressure imports, the price of Iranian LFI2119 rose by 150 to 9,450 yuan per ton, and the price of Iranian 2102TX00 increased by 100 to 9,500 yuan per ton. Driven by the resource prices in Iran, the price of domestic Daqing Petrochemical 2426H rose by 150 yuan per ton to 9,450 yuan per ton, and the price of Shanghai Petrochemical N210 increased by 250 yuan per ton to 9,400 yuan per ton.
Enterprise wechat screenshot _17458262007623.png
Table 1: Price Fluctuations of Some LDPE in China Plastics City (Unit: Yuan/ton)
Despite concerns over supply disruptions in the future, there are still some issues to be addressed at present. Domestic resource supply remains abundant. As of April 23, 2025, the inventory of high-pressure social sample warehouses increased by 3.73% month-on-month and 33.05% year-on-year. The inventory of high-voltage production enterprises was 114,500 tons, an increase of 15.9% compared with the beginning of the month (98,800 tons). Due to the high pressure of inventory clearance, merchants have been actively offering discounts and selling goods since March. The Iranian port incident has led to an increase in the price of imported materials, and there are also concerns that the arbitrage window may close due to the narrowing of the price gap between domestic and foreign markets. From the demand side, the current period is a traditional off-season. The operating rate of domestic high-pressure downstream has dropped to 37.45%, a decrease of 1.38% compared to the previous cycle. The overall operating rate of agricultural films is -4.00% higher than the previous period. Orders have decreased, providing limited support for raw materials.
To sum up, the impact of unexpected events at Iranian ports has provided a short-term boost to sentiment. However, as the port situation gradually improves, the pressure of high inventory, the persistence of the off-season for demand, and the reduction in post-holiday purchasing activities, the upward trend may not be sustained in the long term.
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