March Petrochemical Industry Prosperity Index Report

2026/04/20 15:43

I. Overview of Petrochemical Industry Prosperity

The March 2026 Petrochemical Industry Prosperity Index stood at 99.09, an increase of 2.49 month-on-month percentage points. The sharp month-on-month rise in international crude oil prices became a key driver of structural divergence across the industry.

Upstream oil & gas extraction and fuel processing sectors recorded markedly improved profit margins, lifting the overall prosperity index. Downstream manufacturing sectors faced dual pressures of surging raw material costs and weak terminal demand, resulting in a pullback in prosperity indices.

Breakdown by Sub-sector

Oil & Natural Gas Extraction
Prosperity Index: 96.55, up 10.7 month-on-month percentage points.
Driven by geopolitical tensions, WTI crude oil average price rose 41% month-on-month in March, reversing the previous "price decline & profit contraction" trend and greatly expanding industrial profit margins — the core driver of the overall petrochemical prosperity rebound. Industrial profits recovered and production willingness strengthened, while downstream sectors struggled to pass on high crude costs, with marginal slowdown in inventory turnover.

Fuel Processing Industry
Prosperity Index: 106.21, up 7.92 month-on-month percentage points.
Crude price hikes were smoothly transmitted to fuel processing links. Supported by remaining low-cost crude inventory from prior periods, industrial profit margins improved significantly, keeping enterprises at high operating rates. On the demand side, post-Spring Festival logistics and terminal demand returned to normal, yet downstream acceptance of high oil prices remained low. This caused rapid finished goods inventory accumulation and slower inventory turnover, forming a landscape of improved profits, active production and inventory pressure.

Chemical Raw Materials & Chemical Products Manufacturing
Prosperity Index: 95.58, down 1.72 month-on-month percentage points.

Rubber, Plastics & Other Polymer Products Manufacturing
Prosperity Index: 98.55, down 5.7 month-on-month percentage points.

The two sectors shared similar decline drivers: rising crude prices pushed up basic chemical raw material costs, while finished product price hikes lagged behind, significantly squeezing profit margins. Partial enterprises still used low-cost raw materials procured earlier, keeping profit changes temporarily controllable. Unfinished finished goods from pre-Spring Festival production also remained, with terminal consumption relying on inventory digestion and further slowing inventory turnover. March marked an adjustment period after the fading of cost dividends; the sector will face dual pressures of high costs and insufficient demand going forward.

II. Hotspot Analysis & Future Outlook

1. Escalated Middle East Geopolitical Conflicts & Sharp Surge in International Crude Prices

Intensified Middle East conflicts in March 2026 were the primary driver of international crude price hikes.

On March 2, an advisor to the Iranian IRGC Commander announced the closure of the Strait of Hormuz, with Iran vowing to attack all vessels attempting passage. As conflicts escalated, the risk of crude supply disruptions shifted from potential threats to reality.

The IEA March Oil Market Report stated: Affected by sustained Middle East tensions, the global oil market is facing its most severe supply bottleneck in history. If shipping cannot resume promptly, the global crude supply gap will further widen, with global oil supply projected to drop by around 8 million barrels per day in March.

Driven by this, international crude prices spiked. WTI crude average price rose 41% month-on-month in March, peaking at USD 102.88/barrel. The whole month saw repeated volatility of reconciliation expectations → conflict escalation → drastic oil price fluctuations.

Looking ahead, geopolitical developments remain highly uncertain. Any signal of renewed conflict escalation may further push up oil prices. Meanwhile, the current global crude supply-demand fundamentals are not tight, with obvious off-peak demand characteristics, creating downward correction pressure after rapid oil price rallies.

In the short term, geopolitical premiums remain the core pricing factor for oil prices, and crude market prices will stay volatile amid tensions between conflict risks and weak demand.

2. Manufacturing PMI Returned to Expansion Territory in March

According to National Bureau of Statistics data, China’s March Manufacturing PMI reached 50.4, returning to expansion territory.

By sub-indicators:

March Raw Material Purchasing Price Index: 63.9%, up 9.1 percentage points month-on-month
March Factory Gate Price Index: 55.4%, up 4.8 percentage points month-on-month

The purchasing price growth rate outpaced factory gate price growth, with their gap expanding to a 2-year high, indicating profit migration to upstream sectors. In other words, rising raw material costs exceeded finished product price hikes, squeezing profit margins of downstream enterprises.

Industrial structural gaps widened further: Purchasing & factory gate price indices for oil, coal and fuel processing sectors both exceeded 70.0%, while indices for textiles, chemical fibers, rubber & plastic products remained below the boom-bust line, reflecting weak market activity.

March PMI results are consistent with the petrochemical prosperity index: the industry prosperity rebound was mainly driven by upstream cost pressures, rather than terminal demand recovery.

Key follow-up focuses:

Evolution of Middle East geopolitical situation
Whether terminal demand will see substantive recovery in the Q2 peak season, to effectively absorb upstream cost pressures.

3. Petrochemical Industry Prosperity Outlook (April 2026)

For April crude prices, Middle East geopolitics remain the core determinant.

If US-Israel-Iran conflicts continue or escalate further, crude prices will likely stay above USD 90/barrel at high levels, and upstream oil & gas extraction will continue to enjoy cost profit dividends.
If positive progress is made in US-Iran reconciliation, oil prices may drop rapidly, putting pressure on industrial prosperity.

Overall, oil prices will remain highly volatile in April. Downstream industrial cost pressures will shift from expectations to reality.

Enterprises have nearly exhausted low-cost raw material inventory from March, and will face high-priced crude & chemical raw materials in April, with further compressed profit margins.

Meanwhile, Q2 is the traditional peak consumption season for chemical products. Terminal demand from real estate, textiles, automobiles and home appliances is expected to improve, enabling downstream enterprises to partially pass on costs via price hikes.

Comprehensive forecast: The April petrochemical industry prosperity index is expected to edge down slightly.

Sinochem Chemical