APIC Special Report 2026
S&P Global Energy
APIC 2026: Emerging stronger
Chemicals pivot from market shocks to strategic resilience
S&P Global Energy special report examines Japan’s shift to high-value chemicals, Middle East conflict's impact on Asian petrochemicals and strategies to build resilience and thrive amid disruption.
Middle East war disrupts chemical supplies
Disruptions in the Strait of Hormuz have impacted Middle Eastern naphtha and petrochemical exports, leading to tighter supply across Asia. Producers have cut operating rates due to feedstock shortages, driving sharp price increases and sustaining high costs across the value chain.
Asia petrochemicals face Middle East war challenges
The Middle East war has turned 2026 from a projected year of petrochemical surplus into one of the industry’s most severe supply crises. The geopolitical conflict has exposed critical vulnerabilities in Asia’s petrochemical supply chain, triggering unprecedented feedstock disruptions, driving price volatility and prompting a fundamental reassessment of regional trade flows and feedstock strategies.
Naphtha shock
Before the conflict, the Strait of Hormuz facilitated the daily transit of nearly 1.2 million barrels of naphtha, meeting 60%-70% of Asia’s import needs and accounting for 80%-90% of Middle Eastern naphtha exports, according to S&P Global Energy CERA.
Trade disruptions through the Strait of Hormuz sharply reduced these flows, creating a supply shortage and exposing Asia’s heavy reliance on the Middle East.
March shipments of Middle Eastern naphtha dropped to just 692,000 metric tons -- less than one-fifth of February’s exports, which totaled 4.06 million mt, according to S&P Global Commodities at Sea.
The Platts C+F Japan naphtha marker soared to a record high of $1,207.50/mt on March 31, rising 89.7% in just over a month -- the highest level recorded by Platts, part of S&P Global Energy, since 2010.
Faced with a supply shortfall, Asian buyers sought alternative sources in the Mediterranean, North Africa and Northwest Europe. In March, Asia’s naphtha imports from these regions reached 725,300 mt, a 6% increase from February, according to CAS.
“Naphtha has moved beyond economics ... availability is now the core concern, and while Asian producers are turning to alternatives outside the Middle East Gulf, these flows cannot fully replace lost volumes,” said April Tan, associate director, Asia and Middle East petrochemical feedstock at CERA.
“If the conflict drags on, today’s supply constraint will evolve into demand curtailment as high costs become unsustainable for consumers,” Tan said.
Feedstock shortages compelled naphtha-fed steam crackers across Asia to either reduce operating rates or declare force majeure.
Naphtha has moved beyond economics. Availability is now the core concern, and while Asian producers are turning to alternatives outside the Middle East Gulf, these flows cannot fully replace lost volumes.
—April Tan, associate director, Asia and Middle East petrochemical feedstock,
S&P Global Energy CERA
Ripple effect
The naphtha shortage swiftly impacted the ethylene market, which serves as the backbone of the petrochemical and plastics industries.
Platts Asian ethylene prices more than doubled during the month, reaching $1,500/mt on March 30 CFR Southeast Asia and Northeast Asia, the highest level doubled since 2014.
This disruption extended downstream, impacting the production of propylene and butadiene, as well as aromatics such as benzene and toluene -- all derived from naphtha -- as well as polymers including polyethylene and polypropylene.
Widespread supply constraints across the petrochemical chain triggered sharp price increases, as suppliers struggled to secure essential feedstocks and sought to protect margins by passing on rising costs to downstream buyers.
Asian aromatics spreads to naphtha turned negative and reached record lows in March, as petrochemical demand struggled to keep pace with rapidly increasing feedstock prices amid the Middle East conflict.
Emerging opportunities
The conflict has disrupted trade flows and patterns, prompting petrochemical markets to scramble to mitigate supply shortages and sustain operations.
The global polymer sector, for example, has historically relied heavily on the Middle East, which, according to S&P Global Energy Horizons, has accounted for nearly 25% of global polyethylene and polypropylene exports.
China, in particular, relied on Saudi Arabia, the UAE, Iran and Qatar for about 43% of its total polyethylene imports in 2025, according to data from China’s General Administration of Customs.
As the conflict disrupted traditional supply routes, Chinese buyers increased imports from other Asian destinations.
The country boosted its high-density polyethylene imports in March from several regions, including Taiwan (up 208% month over month), Vietnam (up 377%), Thailand (up 103%) and Japan (up 101%), General Administration of Customs data show.
The Platts HDPE Film CFR Far East Asia price hit its highest level in over seven years, reaching $1,310/mt on April 7, before declining to $1,245/mt on April 24.
China’s increasing self-sufficiency and its emergence as a net polypropylene exporter have helped mitigate regional supply shortages, providing a buffer against price volatility despite ongoing feedstock challenges.
17
million mt
of methanol exported from the Middle East in 2025, with most volumes disrupted
Meanwhile, trade flows in the methanol market -- a key export product from the Middle East, supported by the region’s abundant natural gas resources -- have shifted significantly in recent months.
Over 17 million mt of methanol were exported from the Middle East in 2025, with most of these volumes affected by the current war, according to CERA.
In an unusual reversal of typical trade flows, China has emerged as a methanol exporter to both Southeast Asia and Northeast Asia, prompted by supply shortages resulting from concurrent plant outages and production challenges across Southeast Asia.
In addition, Saudi Arabia and Qatar -- key methanol exporters to Asia -- have faced difficulties in moving cargoes eastward, further exacerbating supply constraints.
China exported 65,726 mt of methanol to Southeast Asia in March, over four times more than the previous month, according to the General Administration of Customs. Meanwhile, China's methanol imports dropped 51% during the same period, totaling 437,914 mt.
The Platts CFR China methanol price jumped to a 54-month high of $453/mt on April 9, while prices in Southeast Asia rose to $690/mt CFR on April 2 -- the highest level recorded by Platts since 2013.
Contributors: Charlene Goh, Fumiko Dobashi, Heng Hou Cheong, Mainak Moitra, Sophia Yao, Stuti Chawla, Su Yeen Cheong, Sunaina Kura, Thiam Hock Tan, Zachary Ooi, Zhi Yi Tan, Zi Nin Tan
Editors: Ankit Ajmera, Rizwan Choudhury, Ribhu Ranjan, Sivassanggari Tamil selvam
Design: Energy Content Design
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