HDPE, LLDPE, PVC surge 68-78% in March-April 2026 as Strait of Hormuz tensions create ‘fear premium’ in feedstock costs. Rajesh manufactures plastic buckets and crates for agricultural use. In February 2026, he could forecast costs. By March 15, his business model was broken. HDPE prices had surged ₹15,000 per tonne. Replacement stock cost ₹95,000+. His customers, operating on thin margins, couldn’t absorb doubled raw material costs. Orders were cancelled. Production lines went idle.
MSMEs bore the brunt. Large manufacturers with diversified supply chains, strategic inventory, and pricing power could weather the shock. Small processors, operating on hand-to-mouth cash flows, faced existential pressure.
The trigger: escalating tensions around the Strait of Hormuz — the world’s most critical oil-transit chokepoint. An estimated 21% of global petroleum passes through this narrow waterway between Iran and Oman. When military threats to shipping, military incidents, or possibilities of blockade the market doesn’t wait for actual disruption. It prices in the possibility.
This “fear premium” pushed crude oil volatility skyward. Petrochemical costs which track crude oil followed. Domestic polymer producers, dependent on crude for feedstock, had no choice but to revise prices upward. From RIL to GAIL to IOC, every major producer announced increases.
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