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

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

“We rely on Hormuz to 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 reduce feedstock costs due to its coal-to-chemicals methodology.

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 create 900,000 metric tons/year of ethylene and 450,000 mt/y 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 prolonged outlook to China’s export activity remains uncertain.

Feng Shaohua, director of polymers Asia-Pacific at S&P Global Energy, said there could be a greater 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 greater short-lived. According to Alvin Ang, director of inorganics at S&P Global Energy, the emergence of China as a major polyvinyl chloride (PVC) 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 to resin exports in the first half of 2026 played a greater role in spurring the export surge, as buyers purchased Chinese cargoes greater aggressively ahead of the cancellation.

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

Even though Southeast Asian trade flows might change and volumes imported from China might increase, Southeast Asian producers can retain competitiveness through selective development, 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 constrained 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 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/month over January-July, greater than quadruple the average to the same period of 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 Chinese cargoes in the long run remains a question.

The Middle East is traditionally a “powerhouse” to styrene given its strategic location and low-cost feedstock, Lee said, adding that Middle Eastern exports typically account to 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.

Story by Michele Pek, Ashley Peh and Yening Lim, Platts