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Some Chinese Raw Material Prices Stuck at High Levels After 2 Months of Iran War

Last month this blog reported hockey-stick Chinese price increases for certain industrial commodities since the Iran war began in late February that were as high as 40-to-77% for plastics, fuel, and chemicals. Gasoline and diesel prices eased somewhat during April, but elevated prices for sulphuric acid, liquified natural gas, and lithium persisted into the first 10 days of May. The spike in polyester prices has stimulated a rebound in cotton use, but agricultural prices are mostly insulated from the crisis so far.

China's April 2026 PPI shows a modest trend of rising prices that seems to have turned around the deflationary tendency that plagued the Chinese economy last year. The average price for industrial raw materials rose 1.2% in March 2026 and 2.1% in April. These were the first month-on-month increases exceeding 1% in the past year. A year ago at this time the raw material price index was declining--it was down -0.7% between March and April 2025. 

An update of prices for industrial raw materials through the first 10 days of May 2026 (indexed to their early January levels) shows some Chinese prices are still stuck at high levels, a few have eased somewhat, and prices of several commodities not initially affected began rising during April. See this blog's April post for a categorization of commodities by their degree of price increase--those categories still hold. 

Sulphuric acid prices rose more than any other raw material reported by China's statistical bureau. Sulphuric acid peaked in early April at 79% of its January level, and it was still 75% above January in the first 10 days of May. Polypropylene prices are about 50% above their January level, and polyethylene is up 36%--a major concern since most of the things China manufactures are made from plastic. Polyester filament prices are up 33%, impacting the textile industry and creating renewed demand for cotton. Meanwhile, lithium phosphate prices crept up during April to 25% above their January level.

China National Bureau of Statistics, raw material prices.
Liquified natural gas prices grew during April to 77% above their January level in early May. Gasoline and diesel prices peaked during April and eased off to 21% above the January level for diesel and 15% above January for gasoline. Coal prices have risen more slowly. Shanxi quality coal rose to 15% above its January level. 

China National Bureau of Statistics, raw material prices.

Cotton prices led increases among Chinese agricultural commodities with an accelerated rise during late April and May to 11% above the January level. Grain prices posted small increases ranging from 1.5% for rice to 3.9% for corn.  Soybean meal prices peaked in April due to seasonally tight supplies but fell during April. Hog prices bottomed out in mid-April at 23% below their January level with a modest recovery late in the month. 

China National Bureau of Statistics, raw material prices.

Pesticide (glyphosate) prices stabilized at a level more than 40% above January. China has seen moderate increases in fertilizer prices. Urea prices posted moderate gains in March, then stabilized at about 8% above their January level. Prices of phosphate and compound fertilizer caught up to urea by early May, while potassium fertilizer prices were stable. 

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