What drives the widening gap between PP futures and crude oil prices in 2026?

What drives the widening gap between PP futures and crude oil prices in 2026?
PP futures diverged sharply from crude in mid-2026. In June, with oil already sliding, PP futures held firm at 8,600-8,900 yuan, then dropped to 7,100-7,400 by month-end as geopolitical fears eased. But by late July, renewed US military mobilization toward the Middle East reversed sentiment, pushing PP2609 from 8,200 to break resistance at 8,600, then 9,100, reaching 9,500 by early September. The logic: PP prices are increasingly driven by supply-side disruptions to naphtha and propane feedstocks rather than crude itself. With Hormuz shipping risks persisting, oil-based PP costs stay elevated at 8,000-10,000 yuan/tonne, while coal-based producers enjoy windfall margins of 3,500-4,000 yuan per tonne. The analyst expects crude to breach $100 and PP2701 to exceed 9,500.