Chemical production in the Middle East continues to maintain its cost advantage over other regions despite the Hormuz crisis and the Iran war. Given the current limitations in the industrial infrastructure of the Persian Gulf, many buyers are seeking diversification in polymer supply, but analysts believe that in the long term, the Middle East will still retain its buyer base.
Market Analysis of Polymers and the Impact of the Hormuz Crisis
Currently, many customers have turned to diversifying their polymer supply due to the Middle East crisis. Since the onset of the Iran war in late February, less product has been supplied through the Hormuz Strait to global markets. However, many customers see this diversification as a protective strategy against the current crisis rather than a long-term replacement. The low prices of Middle Eastern polymers remain attractive to most buyers.
Read more: International Energy Agency Confirms Withdrawal of 20 Million Barrels of Diesel
According to published data, the Middle East is the largest exporter of polyethylene in the world, and last year, polyethylene exports from this region accounted for 43 percent of total global exports of this polymer. In 2025, the Middle East is expected to send 18.7 million tons of polyethylene out of a total of 43.8 million tons of global exports to foreign markets.
Challenges and Opportunities for American Producers
American chemical producers are filling part of the supply gap caused by the Hormuz crisis due to the availability of reliable and abundant resources. Exports of polypropylene or polypropene from the Middle East have experienced the least impact from the war, with only a 24 percent decrease. In comparison, LNG exports have dropped by 95 percent, and exports of urea and methanol have decreased by 83 and 80 percent, respectively.
However, prices for polyethylene and polypropylene have increased by more than 50 percent since the war began. This situation allows American producers to be recognized as immediate winners in the global competition. For example, Dow reported net sales of $6.4 billion in its packaging and specialty plastics segment in the second quarter of this year, a 27 percent increase compared to last year.
This increase is primarily due to rising polyethylene prices, which have increased local prices by more than 40 percent. While petrochemical producers in Asia have announced production cuts due to high naphtha costs and existing restrictions in the Hormuz Strait, energy challenges continue to pressure the European petrochemical industry.
Read more: Russia's Oil and Gas Revenue Reaches One Trillion Rubles in October · Brent Oil Reaches $110 per Barrel
