U.S. and Iran May Agree to Two-Week Mutual Ceasefire! Oil Prices Surge Then Plunge, Brent Crude Falls Over 5% Intraday! Plastic Futures Rise and Fall

I. Overnight Crude Oil Market Dynamics

Market concerns over potential US military escalation against Iran driving up supply risks, but various parties have not abandoned diplomatic efforts, leading to mixed movements in international oil prices. NYMEXCrude Oil FuturesThe 05 contract rose by $0.54 per barrel, up 0.48% month-on-month; the ICE Brent crude oil futures 06 contract fell by $0.50 per barrel, down 0.46% month-on-month. China's INE crude oil futures 2605 contract fell by 2.4 to 715.1 yuan per barrel, and during the night session, it fell by 13.1 to 702 yuan per barrel.

Market Outlook

Oil prices fluctuated and fell back from their highs in the latter part of the night session, giving up their gains for the day. Brent crude, in particular, saw a significant drop, retreating more than 5% from its intraday high, as the market held hope that the conflict with Iran might ease, with some positive news emerging just before the final moments.

Oil prices will ultimately hinge on the final decisions made by the U.S. and Iran—whether they can compromise and reach an agreement. Although significant differences remain a reality, positive signals have emerged, offering the market some hope. The vast majority of people around the world desire peace and do not want a war to inflict serious damage on the global economy. If hostilities do not escalate further, oil prices may have already peaked. However, the damage already done to crude oil supply is a fait accompli; even if a ceasefire agreement is reached, market recovery will take considerable time, making it unlikely for oil prices to fall back below $80 in the near term. Conversely, if negotiations collapse and conflict intensifies, prices will likely surge toward even higher levels. Strengthen risk management and proceed with caution.

II. Macroeconomic Dynamics

1. U.S. President Trump:I agree to suspend the bombing and attacks on Iran within two weeks.This will be a bilateral ceasefire. We have received a 10-point proposal from the Iranian side and consider it a viable plan for negotiations. We have made significant progress on the final proposal for a long-term peace agreement with Iran.

Iran has accepted Pakistan's two-week ceasefire proposal; the ceasefire plan has been approved by the new Supreme Leader.

Russia's Black Sea Oil Terminal in Novorossiysk has suspended ship loading operations after being attacked by a drone.

4. Hungary plans to sign a $500 million oil purchase agreement during Vance's visit.

5. Iran Situation

① Pakistani Prime Minister proposed to Trump a two-week extension, during which Iran would open the strait and all parties would observe a two-week ceasefire. Iran responded that it is actively reviewing the proposal.

Trump said that if progress is made in negotiations, he would consider altering the planned strike against Iran, but would still adhere to the original deadline.

Iranian officials stated that communication with the U.S. through intermediaries is still ongoing, after earlier reports suggested that dialogue channels between the two sides had been closed.

④ Iran threatened to strike Saudi Aramco, the Yanbu oil field, and the Fujairah oil pipeline in response to Trump’s potential reckless actions.

Trump threatened to destroy "the entire" Iranian civilization.

Wans: The US and Israel have completed their military objectives, and the war will end soon, with corresponding negotiations to follow.

Iran's several petrochemical and aluminum plants were attacked.

⑧ The U.S. unilaterally struck military facilities on Kharg Island; Iran stated that key facilities on the island were undamaged.

⑨ Iranian civilians formed a “human chain” to protect power plants and bridges.

The United States denies considering the use of nuclear weapons against Iran.

6. The People’s Bank of China has increased its gold reserves for the 17th consecutive month, adding 160,000 troy ounces of gold in March.

Li Qiang signed a State Council decree, promulgating the "State Council's Regulations on the Security of Industrial and Supply Chains."

8. The National Development and Reform Commission (NDRC) announced that, effective at 24:00 on April 7, domestic gasoline and diesel (standard grades) prices will increase by RMB 420 and RMB 400 per ton, respectively.

III. Morning Market Update for Plastics

Oil prices fell sharply from their highs in the early hours! The main domestic plastic futures contracts showed a mixed performance.

The PE2605 futures contract is quoted at 9,231 yuan per ton, up 0.07% from the previous trading day.

PP2605 contract was quoted at 9793 yuan/ton, up 0.36% from the previous trading day;

PVC2605 contract price is 5,352 yuan/ton, down 1.18% from the previous trading day.

The Styrene May 2026 contract is quoted at RMB 10,678 per ton, down 0.20% from the previous trading day.

IV. Market Outlook

PE: Driven by the strong increase in crude oil costs, the cost support for the polyethylene industry is solid, and the market has a strong bullish sentiment. Traders are actively raising prices and pushing for higher quotes. However, downstream processing plants are not very receptive to high prices, and their purchasing pace has significantly slowed down, with most maintaining a wait-and-see attitude. The overall market transaction is weak, with only small amounts of purchases based on immediate needs, and transactions mostly depend on spot negotiations. Overall, this round of market movement is mainly driven by geopolitical risks and cost factors, while demand-side participation is insufficient, leading to certain price premiums. It is expected that the polyethylene market will remain in a high-range fluctuation in the short term. Before there are clear signals of easing in geopolitical situations, the market's downward space is limited. At the same time, the continued hesitation of downstream sectors will suppress the rise, and the market will generally show a narrow range of strength, with transactions mainly based on actual demand.

PP: Domestic PP producers adopt varied pricing strategies. Some maintain firm ex-works prices, while others have raised their ex-works prices by RMB 100–1,000 per ton based on their inventory levels and order situations. Some producers have refrained from announcing unified prices and instead negotiate prices individually per order. Market traders generally adjust their offers in line with futures market movements and upstream price trends. Overall market sentiment remains cautious—though there is some intention to push prices higher, actual trading volumes have not shown significant improvement. Market activity remains muted, with limited transaction volumes. Downstream end-users, facing continuously rising prices, are mostly adopting a wait-and-see approach, showing weak purchasing interest and procuring only minimal quantities to meet immediate needs. Final transaction prices are determined through individual negotiations, with no signs of concentrated bulk buying emerging.

From a supply-demand perspective, although some chlor-alkali plants have scheduled maintenance starting in April, current supply remains at a high level. On the demand side, downstream consumption is largely limited to essential needs, as elevated prices continue to dampen terminal purchasing enthusiasm. Compared to the sharp price adjustments seen earlier, the market may now enter a consolidation phase. On the external front, crude oil prices have risen; despite ongoing indirect negotiations between the U.S. and Iran aimed at easing tensions, rhetoric from both sides continues to escalate. For oil prices to retreat to a more reasonable level, any ceasefire must be accompanied by an agreement ensuring the free passage through the critical Strait of Hormuz, through which one-fifth of the world's oil and natural gas supplies transit. Due to the potential closure of this strait, major oil-consuming countries, particularly in Asia, are conserving or reducing their oil consumption. Overall, the PVC spot market is likely to experience narrow-range adjustments in the near term.