Investigation! Dongguan Plastic Market Under Shockwave of Middle East "Oil Cuts": Raw Material Prices Change Every Hour, Trucks Queue for 24 Hours Unable to Pick Up Goods

How does Middle Eastern conflict trigger panic in the Dongguan plastics market?

Our reporter (chinatimes.net.cn), Hu Mengran, intern reporter Huang Haiting, Shenzhen photo report

How does the Middle Eastern war ignite raw material anxiety among Chinese factories? Recently, a video of a “long line of trucks waiting three hours to enter warehouses” at the Dongguan Zhangmutou plastics market has gone viral online. Traffic congestion on Baiguodong Road is being called the “Spring Festival travel rush” for the plastics industry. This supply chain shock, occurring in China’s “plastics trading hub,” originates from the sudden “disruption of navigation” in the Hormuz Strait, thousands of miles away.

Since the geopolitical conflict escalated on February 28, leading to the temporary blockade of the Hormuz Strait, this industry hub with an annual transaction volume close to 100 billion yuan has seen prices of key raw materials like ABS and PC generally surge over 40% within just a week. Sharp price fluctuations and short-term logistics congestion have subjected this critical node in the global plastics supply chain to an unprecedented stress test.

“Waited an hour to move just one kilometer,” said truck driver Mr. Guo describing the scene to Huaxia Times. This veteran driver, who has been running the Changping–Zhangmutou route for over ten years, admitted, “I’ve never seen such a scene.” However, in this raw material volatility triggered by geopolitical tensions, industry associations and companies did not sit idly by waiting for the crisis to spread.

Our week-long investigation found that from warehouse overflows to price fluctuations, from traders rushing to pick up goods to downstream factories facing cost pressures, a clear transmission chain emerged. The Guangdong Plastics Industry Association quickly activated emergency coordination mechanisms. Leading companies took the lead in stabilizing prices and ensuring supply, while upstream and downstream enterprises actively communicated and shared risks. A rational, industry-wide response was unfolding.

Billion-yuan plastics hub’s “rush for goods” and “mass congestion”

On the afternoon of March 10, when our reporter arrived at the entrance of Baida Industrial Zone in Zhangmutou, the scene was striking: a red semi-trailer covered tightly with tarpaulin, with seven or eight vehicles waiting behind for loading and unloading. Tire tracks crisscrossed the ground, forming uneven gullies.

“Today, the warehouse overflowed, so vehicles are queuing. Although freight rates haven’t increased, drivers have to pay extra for overtime due to long waits,” complained Mr. Guo, the freight driver. He usually runs two trips a day from Changping, but now “can’t even load one.”

During the visit, drivers often peeked out from their cabs or jumped down, tiptoeing to look ahead. The long convoy stretched out of sight, faces full of anxiety. This congestion was no accident. Wang Xiaolin, general manager of Dongguan Zhongtes Plastic Raw Materials Co., Ltd., told us, “At that time, material prices surged rapidly, traders were quickly locking in orders and picking up goods, which caused delivery congestion. There were many trucks for pickup and many for warehousing, all stuck together.”

This extreme fluctuation propagated down the industry chain, ultimately squeezing the profit margins of downstream manufacturers. Liu Xingping, president of the Guangdong Plastics Industry Association, recalled those days with lingering fear. In an exclusive interview, he said, “I’ve been developing the Zhangmutou market for 30 years, and I’ve never seen such a rush for goods and queuing.”

He explained that the day after the Middle East conflict erupted, both Zhangmutou and Changping plastics markets experienced all-day congestion. “Some drivers couldn’t get goods for 24 hours. We dispatched over 20 security and association staff in Changping to direct on-site, and at most, they could get goods in six hours. Zhangmutou was even worse, with no pickups all day.”

This “only entering, not leaving” or “more entering than leaving” state is characteristic of supply chain blockage. When goods flood in from all directions but cannot flow smoothly to end manufacturers, prices are rapidly driven up by panic.

Liu Xingping estimated: “Changping Dajingjiu Plastic City’s annual transaction volume is about 120 billion yuan, while Zhangmutou’s is between 100 and 120 billion. But within ten days of the conflict, at this rate, a month’s transactions could double.” He further explained that Zhangmutou’s over 100 warehouses, which had only about 50% utilization in recent years, were fully overflowing within three days of the war, with inventories increasing by over 50%.

From a high vantage point in a warehouse park in Zhangmutou, our reporter saw rows of open warehouse doors, forklifts shuttling back and forth, and unloading workers busy and sweating. Security at the gate told us that daily truck entries and exits had tripled recently, with queues even at 10 pm. “We can only take turns eating and dare not leave our posts.”

Liu Xingping looked out the window at the long line of trucks and sighed, “I’ve been developing the Zhangmutou market for 30 years, and I’ve never seen such a scene of rush for goods.”

How geopolitical conflict transmits to Dongguan warehouses

If congestion is the surface symptom of this crisis, then sharp price fluctuations are its core and the deeper root cause of supply chain blockage. When probing the price mechanism behind this rush for goods, a high-frequency term emerged—“supply cut.”

In China Dajingjiu Plastic City, Chen Yu, secretary-general of the Guangdong Plastics Industry Association, detailed the transmission chain from the Strait of Hormuz to Dongguan warehouses: “First, Iran’s oil is a type of naphtha, which produces many industrial products. When the Strait of Hormuz is closed, oil can’t be shipped out, and since plastics raw materials are derived from oil, domestic petrochemical plants face raw material shortages, leading to tight supply and soaring prices.”

But the problem is more than that. Chen Yu revealed a little-known industry detail—insurance issues. “Now many insurance companies are refusing coverage. If goods are damaged at sea, no one bears the risk.”

However, what makes this price surge different from previous ones is not just external supply disruption, but the chain reaction of psychological panic it triggers. Chen Yu analyzed the deeper logic: “This price increase isn’t driven by domestic demand growth but by the war’s force majeure, causing panic buying. The industry fears this kind of panic-driven surge.”

She further explained that past price hikes had clear signs, but this time is entirely different—“because the war affects transportation, no one can predict when it will recover.” This unpredictability causes panic to spread rapidly along the industry chain. No one knows if they can buy goods tomorrow, or how high prices will go, so everyone chooses to “grab first.”

Panic leads to buying spree, which leads to stockpiling, further blocking the supply chain—funds are trapped in warehouses, goods can’t reach factories that need them, and the entire industry chain’s circulation stalls. Meanwhile, price mechanisms distort and deform. Yang Jun, general manager of Dongguan Lingtou Yang Plastic Technology Co., Ltd., experienced this price “roller coaster” firsthand. His company is a primary agent for several petrochemical plants, with over ten years in the plastics raw materials industry. On the third day of the Middle East conflict, his phone was almost overwhelmed—clients frantic to place orders, fearing they might miss out.

“Before, ABS prices were around 7,000-8,000 yuan, now they’ve surged to 13,000-14,000, even as high as 17,000-20,000, doubling in price,” Yang Jun said tiredly in his office filled with samples and orders.

When asked how order methods have changed, he replied, “Old contracts are now paid with half new contracts and half old. For new contracts without old ones, prices are negotiated per order, sometimes hourly, with prices changing constantly.”

Wang Xiaolin described even more granular price fluctuations. “We don’t set a daily price; we might have a different price for each order. Inventory is decreasing rapidly. For common raw materials, we negotiate per order based on market conditions and adjust prices accordingly.”

This “hourly price” rhythm causes market participants’ moods to fluctuate. Yang Jun called it a “roller coaster”: “One day up 5,000 yuan, the next down 5,000. You have to stay calm because much of the profit is hard to realize. Overbidding carries big risks, especially with so many uncertainties in the war.”

But why does a conflict far in the Middle East cause such intense shocks to Dongguan’s plastics market? Liu Xingping gave the most direct answer: “Plastics raw materials are refined from oil; they are the ‘grain’ of industry. From aerospace, automobiles, to consumer electronics like TVs, refrigerators, and phones—every high-tech product and daily item relies on plastics. When oil prices rise, plastics raw materials inevitably follow. This transmission chain is direct and unavoidable.”

This “industrial grain” property makes the plastics industry extremely sensitive to crude oil prices. When the Middle East conflict erupts, the Strait of Hormuz is blocked, and 20% of global oil transportation is disrupted, the plastic market in Dongguan, thousands of miles away, inevitably fears “starvation.” This panic propagates along the industry chain, ultimately pressuring the most vulnerable links—tens of thousands of downstream manufacturing factories.

Upstream “shutting down,” downstream “disrupted supply”

However, the end point of this price storm isn’t just the traders’ warehouses but the countless downstream manufacturing plants. When shifting focus from traders to the broader industry chain, a more severe problem emerges: upstream “shutting down,” downstream “disrupted supply.” The processing enterprises caught in the middle face a survival crisis—this is the “organizational necrosis” caused by supply chain blockage.

On March 12, our reporter visited China Dajingjiu Plastic City, known as the “largest international plastics trading market in the country.” Compared to the orderly Zhangmutou, here the scene was more organized. But inside several trading offices, anxiety was palpable.

Liu Xingping analyzed the current dilemma: “The Middle East conflict has caused oil prices to skyrocket, bringing a huge disaster to Chinese companies. Plastics raw materials are the ‘grain’ of industry. China’s entire supply chain—by 2025, 2026—has orders booked, but the sudden 50-60% price increase in plastics raw materials is devastating. Our profit margins are only 10-15%. Processing factories sell and get paid three months later. If prices keep rising, many factories won’t be able to sustain.”

Chen Yu showed us a screenshot from a social media chat—an owner of a product company lamented, “We won’t deliver for now.” The reason is simple: they paid for raw materials at the original contract price, but now, to buy raw materials at the new, higher prices to fulfill previous orders, would mean losses. “No businessperson wants to do unprofitable business,” she sighed.

But halting production means breach of contract, leading to legal disputes. Liu Xingping revealed that the association has recently mediated multiple such disputes: “Upstream petrochemical plants can’t deliver, traders have already ordered from others, but upstream refuses to supply, causing conflicts and legal issues.”

When asked about solutions, Liu described the association’s own experiences: “Yesterday, someone owed us ten containers, which could have earned 1.8 million yuan, but they couldn’t deliver. The deposit was only 50,000 yuan, and in the end, we lost 50,000. We could have earned 2 million, but there’s nothing we can do—everyone understands.”

As panic propagates along the industry chain, those bearing the brunt are the processing companies with orders but facing raw material price surges. They can’t fully pass costs to customers nor afford to breach contracts and lose reputation, so they struggle to survive in the gaps.

In Yang Jun’s conference room at Lingtou Yang Plastic, he shared his coping strategies: “Our current policy is to follow the upstream petrochemical plants’ policies—align with their pricing. We first reassure downstream clients, then explain the situation. In this force majeure, the entire industry chain must work together to get through this.”

Wang Xiaolin adopted a different approach. “For old clients, we try to maintain original prices for initial orders, but we also inform them of future price trends, leaving the choice to the customer. Our stockpiles are mainly for clients; as long as there’s no panic buying, we can continue stable supply.”

When asked how he handles clients wanting to stockpile, Wang Xiaolin straightforwardly said, “We do some psychological work, hoping they stay rational and don’t follow the trend excessively. We also plan orders based on our procurement and production capacity, not accepting arbitrary large orders.”

Finally, the reporter asked Liu Xingping if the ongoing war might trigger another supply chain crisis. After a moment of silence, he replied, “There will still be fluctuations. If the war continues, prices will keep rising. But after this panic, 80% of merchants realize the seriousness of the situation, and everyone’s mindset is more stable. We do business within our means, more steadily.”

On March 16, standing again on this land, the sunshine was still bright, and traffic was normal. The supply chain blockade built by panic and hoarding seemed temporarily eased. As of this writing, the situation in the Strait of Hormuz remains uncertain, with international oil prices oscillating around $100 per barrel. For Dongguan, the plastics hub, the congestion on roads may have eased, but the “blockage” and “pain” in the industry supply chain continue. This butterfly storm from the Middle East is profoundly testing China’s manufacturing resilience, wisdom, and integrity. On this intertwined chain of rupture and reconstruction, every industry participant is writing their survival story in their own way.

Editor: Xu Yunqi, Chief Editor: Gong Peijia