KARACHI: The ongoing conflict in the Middle East has led to significant disruptions in the petrochemical industry, particularly affecting the supply of feedstock. The suspension of trade through the Strait of Hormuz has prompted several Asian petrochemical producers to declare force majeure, resulting in a 22 percent increase in naphtha prices over the past two weeks. This surge, coupled with rising freight and insurance premiums, is expected to impact the primary margins of downstream petrochemical products, including PVC.

According to JS Global, the heightened feedstock costs have led to a week-on-week decline in PVC-ethylene primary margins, driven by a sharp rise in ethylene prices closely tied to naphtha. Despite these challenges, PVC prices have remained largely stable this year due to a persistent global oversupply limiting any significant price recovery. In a related development, Lotte Chemical Pakistan Limited has expressed interest in acquiring a majority stake in Engro Polymer and Chemicals from Engro Holdings, pending regulatory approvals.