Dubai: The ongoing conflict in the Middle East has significantly disrupted global chemical markets, affecting energy supplies, trade flows, logistics, and demand dynamics. The reopening of the Strait and signs of a potential peace agreement between the United States and Iran may alleviate some supply chain issues. However, experts caution that a full normalization of petrochemical trade and recovery of supply chains could take several months, contingent upon the resolution of the conflict.

According to JS Global, the market turmoil has led to a substantial decline in ethylene-based PVC prices, which have dropped by $650 per ton, or 45%, to approximately $795 per ton over the past three months. This decrease is primarily attributed to increased production of carbide-based PVC from China, which has offset supply losses from ethylene-based producers. As a result, PVC-ethylene spreads have increased by 2% week over week.

Additionally, prices for purified terephthalic acid (PTA) have fallen by about 22% from their peak, currently standing at $750 per ton, following a 23% drop in upstream paraxylene (PX) prices to $1,000 per ton. Although the prices have decreased, PTA-PX margins have narrowed by 11% since the start of the Middle East conflict, as persistent PX supply tightness has constrained PTA operating rates.