Rising tensions in the Middle East and disruption in the Strait of Hormuz sent prices of petrochemicals higher worldwide at the beginning of March. Major products such as DEG, phenol, acetone, benzene, propylene, PP, EDC, ethylene and polyethylene saw substantial gains on rising crude oil and feedstock costs. Disruptions to supply, weaker cracker utilisation, logistical constraints and force majeure notices limited availability, resulting in more risk premium in global petrochemical supplies.
Diethylene Glycol
DEG prices shot up in the first part of March 2026, increasing by about 17% in Asia and 5% in Europe, mainly due to mounting geopolitical tensions in the Middle East that disrupted logistics and raised feedstock costs. Having been relatively flat at the beginning of the year, prices started to increase rapidly in early March as these external factors were magnifying.
The protracted U.S., Israel, and Iran conflict since late February, has interrupted crude flow through the Strait of Hormuz, and caused naphtha and other petrochemical feedstock prices in Asia to soar. Rising crude oil prices have also raised the cost of ethylene and ethylene oxide -- important raw materials in the production of DEG – adding more upward pressure on DEG prices.
The tensions also sparked fears of availability of materials as volatility in the Middle East has squeezed regional supplies. Despite the previously oversupplied and weak demand situation for the feedstock at the start of 2026, the situation has turned around in March as producers are taking prices up to compensate for rising energy and raw material costs.
In conclusion, the Asian DEG market is currently caught in a “war premium” where geopolitical-related weakness in the market earlier is being thrown overboard and replaced with sharp price hikes.
Benzene
Asian benzene prices jumped around 20% in the first half of March amid escalating uncertainty surrounding the global market. Market sources said the ongoing Middle East tension has contributed to further volatility in energy and petrochemical segments and market sentiment remains cautious. A China based trader also said that the tightness in availability may worsen as a number of steam crackers have reportedly cut rates, which will reduce naphtha availability in the market.
European benzene prices firmed by around 6%, supported by rising costs of crude oil and feedstock. Blockading the Strait of Hormuz has propelled crude oil prices to multi-year highs, and now global bunker fuel prices are rallying, straining imports for European buyers. Consequently, naphtha and other petrochemical feedstocks have risen in price, leading to higher costs for making benzene locally. In addition, prompt benzene in Europe is still a scarce commodity and the fear of disruption to the flow of regional trade is growing.
Phenol
In early March, the price of phenol in China rose by 7.6%, feedstock benzene price went up sharply by 20% in the same period. Benzene is under strong upward pressure as a result of geopolitical tension in the Middle East, which raises the price of crude oil and disrupts the key world regions. Phenol prices increased in Europe by 3%, while benzene by 6% due to tight upstream supply. In general, the market is subjected to double pressure of the rising raw material cost as well as the logistics disturbance, and 10-20% price hike is expected within a short period of time.
Acetone
In early March, acetone prices in India saw an increase of 6% due to higher cost of raw material after the Iran war destabilized the regional market. Propylene and Benzene are shaping the prices now, but crude oil prices are setting a strong floor due to the high level. Acetone prices in Europe are already elevated and will be increasing further within the next weeks. European naphtha prices, which have a direct bearing on the production of acetone, are still very much inseparable from energy prices and upswings are expected if the crude oil price remains high.
The market is being hit by concerns of increasing costs of feedstock and disruption in logistics, and buyers are said to be showing rather cautionary buying. There are also concerns about very limited spot offers and tightening supply of prompt deliveries amid uncertainties for imports from the Middle East.
Propylene
Propylene prices in China increased by about 7% in early March, mainly driven by an 11% rise in crude oil prices. Across Asia, propylene prices have surged due to supply disruptions, escalating geopolitical tensions in the Middle East, and higher crude oil costs. The closure of key shipping routes such as the Strait of Hormuz has restricted the movement of raw materials, further tightening supply. Lower production levels have reduced spot availability of propylene, supporting the upward price trend. In India, some producers have reduced output while prioritizing LPG production for domestic demand, which has affected feedstock availability. As a result, downstream producers are facing higher production costs. Market participants expect prices to remain firm in the near term if geopolitical tensions continue to disrupt supply chains.
In Europe, propylene prices also increased by around 7%, mainly due to heightened geopolitical tensions in the Middle East, particularly the US–Iran conflict, which has affected oil and feedstock supplies. Naphtha prices, a key feedstock for propylene production in Europe, rose sharply, leading to higher monomer contract prices. Additionally, the market faced supply constraints as several steam crackers operated at lower rates, further tightening availability.
Polypropylene
Polypropylene (PP) prices in Asia increased by around 9% in early March 2026 amid rising geopolitical tensions in the Middle East. The blockade of key shipping routes has disrupted the supply of raw materials, including naphtha and LPG, tightening feedstock availability in the region. In India, PP prices have climbed sharply by 7%, driven by higher crude oil prices and freight disruptions. Major producers in India have also announced price increases this week, reflecting the impact of the ongoing conflict.
Supply disruptions have further supported the price rise. Saudi Arabia’s Advanced Petrochemical Company declared force majeure on PP supplies to Asia due to the conflict, expected to remain in effect until March 31, 2026. In Singapore, TPC declared force majeure on March 9, 2026, after shutting multiple plants on Jurong Island due to the lack of olefin feedstock from upstream supplier PCS, which was also affected by the conflict.
Additionally, several producers and traders across Asia have suspended PP offers, and at least one Southeast Asian producer has declared force majeure on polyethylene (PE) and polypropylene (PP) production. As a result of raw material disruptions and supply uncertainties, Asian producers are considering reducing operating rates, while spot PP prices in China and Southeast Asia have risen sharply.
Ethylene Dichloride
EDC prices increased in early March 2026, rising by around 5% in India and 2.5% in Saudi Arabia, mainly due to higher feedstock costs and ongoing regional conflicts. The price of ethylene, a key feedstock, also rose by about 5% globally, increasing production costs for downstream industries. The closure of the Strait of Hormuz and related geopolitical tensions have constrained naphtha supplies, forcing several Asian steam crackers to reduce operating rates.
Average ethylene operating rates in Northeast Asia are expected to fall to around 70% in March, compared with 80% in February, while South Korean crackers may drop to nearly 65%. Many Asian producers are responding by lowering operating rates, extending maintenance, or advancing planned shutdowns, which is tightening supply in the market. As a result, the market expects further price increases if Middle East tensions persist, with the ongoing conflict adding a “war premium” to petrochemical prices. If disruptions in the Strait of Hormuz continue, crude oil prices could exceed $100–$110 per barrel, sustaining upward pressure on Asian petrochemical costs.
Ethylene
Asian ethylene prices increased by around 5% in early March as the US–Iran conflict disrupted naphtha supplies from the Middle East. The blockage of the Strait of Hormuz has significantly affected maritime shipments, leading several Asian petrochemical producers to reduce operating rates or declare force majeure. Middle Eastern suppliers, which account for over 60% of Asia’s naphtha supply, have been heavily impacted, creating raw material shortages across the region.
As a result, many producers have adjusted operations. In Singapore, PCS (Pulau Ayer Merbau) declared force majeure on 5 March and reduced operating rates, which led to the shutdown of downstream units at TPC on 9 March, while Aster Chemicals and Energy also issued force majeure. In Thailand, Siam Cement Group (SCG) halted operations at its Rayong Olefins unit due to difficulties securing naphtha and propane.
In Japan, Mitsubishi Chemical reduced operating rates at its 485,000 t/yr Ibaraki plant on 9 March, while Idemitsu Kosan warned of possible shutdowns at its Tokuyama and Chiba plants if supply shortages continue. Tosoh also shut a 493,000 t/yr cracker for maintenance on 4 March, with potential delays in restart.
In South Korea, LG Chem plans to cut operating rates to around 60% at its naphtha-fed crackers in Yeosu and Daesan, while Yeochun NCC (YNCC) has declared force majeure. Meanwhile, in China, several producers including CNOOC and Shell have reportedly reduced operating rates by 10–30%, further tightening ethylene supply in the region.
Asian ethylene prices are expected to remain firm in the near term as supply disruptions and reduced cracker operating rates continue to tighten regional availability. If Middle East tensions and Strait of Hormuz shipping disruptions persist, feedstock shortages and higher energy costs may push ethylene prices further upward across Asia.
HDPE/LDPE
Prices of HDPE and LDPE in Asia rallied in early March, with gains of approximately 4.2% and 7% respectively, attributed largely to the mounting tension in the Middle East. The fighting has sparked worries about supply disruptions, sending crude oil and feedstock prices up and strengthening polyethylene markets. Consequently, the regional PE prices rose, while a lot of the players such as traders and producers were more or less waiting on the sidelines due to the uncertainties. In China, domestic petrochemical futures and prices rose on stronger crude oil, while Indian manufacturers raised prices significantly at the beginning of the month.
A similar pattern arose in Europe, where HDPE and LDPE prices were pressured by higher energy, feedstock and logistics costs due to geopolitical tension. The conflict has tightened supply and increased volatility, leaving LDPE in particular highly affected by strong demand and scarce supply, translating into sharp price rises.
