APPEC: Chinese chemical exports may reshape Asian trade flow amid US-Iran war

Asian chemical trade flows could get reshaped with China emerging as a key supplier amid supply disruptions caused by the Middle East war, trade sources and analysts said Sept. 10 at APPEC 2026, hosted by S&P Global Energy in Singapore.

Chemical prices in Asia have seen a significant divergence during the conflict. Chinese producers, demonstrating flexibility in feedstock usage and less dependence on feedstock imports, managed to keep prices more competitive than the rest of Asia, Joyce Lee, director of olefins & derivatives at S&P Global Energy, said.

"We rely on Hormuz for around 50% of our feedstock, and once the war started, we had to shut down two of our crackers," Sakchai Patiparnpreechavud, president and CEO of Siam Cement Group Chemicals, said, contrasting it with China's comparatively lower feedstock costs due to its coal-to-chemicals technology.

Thailand's Rayong Olefins Co., part of SCG, is expected to restart its steam cracker in Rayong in mid- to late September, sources close to the company said Aug. 17-18.

The cracker, which can produce 900,000 mt/year of ethylene and 450,000 mt/year of propylene, was shut down in mid-March due to a feedstock crunch in the wake of the Middle East conflict, Platts, part of S&P Global Energy, reported earlier.

Olefins

In the olefin and polyolefin markets, the long-term outlook for China's export activity remains uncertain.

Feng Shaohua, director of polymers Asia-Pacific at S&P Global Energy, spoke of a more permanent effect on some polyolefin markets. "The war did not just move Asian prices; it reshaped Asian supply," Feng said.

However, in some markets, the shift in trade flows was more short-lived. According to Alvin Ang, director of inorganics at S&P Global Energy, the emergence of China as a major polyvinyl chloride exporter was temporary.

The sharp spike in export volumes in March-April was only partially due to the Middle East conflict, Ang said. Instead, the cancellation of value-added tax rebates for resin exports in the first half of 2026 played a greater role in spurring the export surge, as buyers purchased Chinese cargoes more aggressively prior to the cancellation.

Ang added that China's export volume of polyvinyl chloride has now normalized, even though the Middle East conflict persists.

Even though Southeast Asian trade flows may change and volumes imported from China increase, Southeast Asian producers can retain competitiveness through selective growth, Bahrin Asmawi, CEO of Petronas Chemicals Marketing, said.

Styrene

On the aromatics front, China is similarly covering a supply gap in the regional styrene market, as Middle Eastern supply has been strangled by disruptions tied to the regional conflict, Kate Lee, senior principal analyst at S&P Global Energy, said.

"Currently, if you need styrene cargoes, you have to source them from China," a Southeast Asia-based trader said Sept. 11, adding that spot cargoes were low within the region.

As long as styrene monomer is unable to transit the Strait of Hormuz, Indian buyers will continue sourcing cargoes from China, a trader based in China said Sept. 11.

China's styrene monomer exports averaged 123,539 mt per month over January-July, more than quadruple the average for the same period the previous year, according to customs data.

Still, while the styrene market has undergone structural changes, whether Southeast Asian and European buyers switch over to China cargoes in the long run remains a question.

The Middle East is traditionally a "powerhouse" for styrene given its strategic location and low-cost feedstock, Lee said, adding that Middle Eastern exports typically account for 20% of global trade.

"The buyers in that region still want consistency and reliability. I think buyers, once they can buy Middle Eastern volumes, would be happy to go back to that," Lee added.