Middle East Chemicals Keep Their Cost Edge Despite Hormuz Crisis

Polyethylene is the world’s most widely used plastic, while polypropylene is the second-most widely used commodity plastic, according to the article. Both are polymers, meaning long chains of chemical molecules that can be processed into many different products. Their importance comes from their enormous production volumes and broad industrial use.

Polyethylene is especially important in packaging and specialty plastics. Dow’s Packaging & Specialty Plastics business benefited when polyethylene prices rose. Polypropylene is also traded globally and is included among the key polymer materials affected by the Hormuz crisis. The article does not list every end product, but it identifies both materials as major commodity plastics.

Their widespread use makes supply disruptions especially significant. When Middle Eastern shipments fell, buyers sought alternative suppliers, and polymer prices rose by more than 50% since March. Even so, customers still prioritize price, helping low-cost Middle Eastern producers retain long-term importance despite current supply risks.

The Middle East plays an unusually large role in the global polyethylene trade. It was the world’s biggest polyethylene exporter in 2025, sending 18.7 million tons abroad. That represented 43% of all global polyethylene exports, giving the region enormous influence over international supply and pricing.

The global export total was 43.8 million tons. North America ranked second, with 15.6 million tons. These figures show why disruptions around the Persian Gulf matter far beyond the region. A change in Middle Eastern shipments can quickly affect customers, competing producers, and polymer prices worldwide.

The Hormuz crisis has reduced available volumes, but it has not erased the Middle East’s structural advantage. The region still has a large production base and low-cost output supported by abundant naphtha. Buyers are diversifying temporarily, while many continue viewing Middle Eastern polymers as difficult to replace over the long run.

The Iran war and Strait of Hormuz constraints have reduced the polymer volumes reaching customers from the Middle East. Buyers received fewer shipments and began seeking alternative sources. This changed short-term sourcing patterns, especially for customers worried about the reliability of Gulf supply during the crisis.

The disruption also affected prices. Polyethylene and polypropylene prices rose by more than 50% since March. Middle Eastern polypropylene exports fell 24% between April 2025 and April 2026. That decline was smaller than the region’s combined export drop of 54%, and far below the 95% fall in LNG exports.

North American producers are filling part of the gap because they have secure feedstocks and ample supply. Asian manufacturers reduced capacity runs when naphtha became too expensive or was trapped near Hormuz. European producers remain under pressure from high energy costs. The crisis has therefore shifted near-term trade without removing Middle Eastern importance.

Middle Eastern producers remain competitive because they have two powerful advantages: extensive production capacity and low-cost manufacturing. The article highlights abundant naphtha, a key feedstock, as the main foundation of that cost position. Large output also gives the region a strong, established buyer base and global market presence.

The crisis has not removed those advantages. It has mainly restricted access to industrial capacity and shipments through the Strait of Hormuz. By contrast, higher-cost Asian producers faced expensive or trapped naphtha, while European chemicals companies continued dealing with high energy costs and idled capacity. These differences make production costs vary sharply by region.

Buyers are therefore balancing reliability against price. Many have diversified their suppliers during the crisis, but customers still generally choose based on cost. Analysts and BASF indicate that current bottlenecks are unlikely to reduce the Gulf’s long-term importance, because its low-cost production remains difficult to match.

North American chemicals companies are benefiting because the Hormuz crisis has interrupted part of the Middle East’s supply. Customers need polymers from other regions, and North America has secure feedstocks and ample supply. That makes it one of the clearest immediate alternatives for buyers seeking more dependable shipments.

The opportunity is visible in Dow’s results. Its Packaging & Specialty Plastics segment reported net sales of $6.4 billion in the second quarter, up 27% from a year earlier. Dow’s chief financial officer said higher polyethylene pricing lifted local prices by more than 40%, making price increases a major factor behind the gain.

North America is not necessarily replacing the Middle East permanently. The article describes the region as filling some of the supply gap during the crisis. Middle Eastern producers still retain a long-term cost advantage, while North American companies benefit most immediately from disrupted Gulf supply and higher polymer prices.

Polymer buyers are changing suppliers because the Iran war and Strait of Hormuz constraints have reduced the volumes they receive from the Middle East. Diversification lowers their exposure to a single disrupted supply route. It gives customers alternatives while shipments and industrial operations in the Persian Gulf remain constrained.

However, many buyers view diversification as protection against the current emergency, not a lasting replacement. Middle Eastern producers still offer low-cost polymers, supported by abundant naphtha and a large production base. Those advantages remain important even when deliveries are less reliable. The region also has a deeply established buyer network.

Price is the deciding factor for many customers. Morningstar analyst Christian Flemming told Reuters that buyers continue basing purchasing decisions on price. BASF similarly indicated that current bottlenecks are unlikely to reduce the Gulf producers’ long-term importance. Alternative suppliers can gain volumes now, but cost keeps the Middle East central.

Feedstock costs determine how cheaply producers can make polymers. The article identifies abundant naphtha as a major Middle Eastern advantage. When this input is affordable and available, producers can offer lower prices. When it becomes expensive or inaccessible, manufacturing margins weaken and companies may reduce operations.

Production scale matters too. The Middle East has an extensive production base and exported 18.7 million tons of polyethylene in 2025. That scale supports a large global buyer network and helps the region compete internationally. North America also benefits from secure feedstocks and ample supply, allowing it to capture disrupted demand.

Energy prices create another regional divide. Higher-cost Asian producers reduced capacity runs when naphtha was expensive or trapped at Hormuz. Europe’s chemicals industry has faced high energy costs and has rationalized or idled capacity since 2022. These pressures make low-cost feedstocks, scale, and energy access decisive competitive advantages.