US Chemicals Remain Resilient Amid Strait of Hormuz Tensions

US Spot Petrochemical Prices Continue to Climb Amid Strait of Hormuz Disruptions

US spot petrochemical prices rose further last week, driven by shipping disruptions in the Strait of Hormuz. The disruptions have led to tighter supply, causing spot polymer-grade propylene (PGP) to reach its highest level in more than three years. PGP, a key material used to make polypropylene plastics found in packaging, automotive parts, and consumer goods, rose to 61.5 cents a pound on Friday, a level last seen in March 2023.

The war in Iran has contributed to the recent gains in PGP prices. Ethylene, a crucial feedstock for polyethylene, also increased, reaching 33.5c/lb. Methanol traded on the US spot market continued to firm, jumping to $1.425 a gallon, its most expensive since November 2021. This surge is attributed to concerns over flows through the Strait of Hormuz, as roughly one-third of global seaborne methanol trade moves through the waterway.

The US Navy's decision to blockade Iranian shipping in the Strait of Hormuz on Monday intensified concerns over flows, leading to a significant increase in methanol prices. Spot butadiene also surged to 76 cents a pound, the highest since September 2022. Primarily used to make synthetic rubber, more than 70% of US consumption is tied to tire production, making shifts in availability a key factor in supply for US producers.

| Price Comparison | Current Price | Previous High | Date of Previous High | | --- | --- | --- | --- | | PGP (cents/lb) | 61.5 | 61.5 | March 2023 | | Ethylene (c/lb) | 33.5 | N/A | N/A | | Methanol (gallon) | $1.425 | $1.425 | November 2021 | | Butadiene (cents/lb) | 76 | 76 | September 2022 |