The escalating conflict between the US and Iran will have a profound impact on the global chemical industry through multiple pathways, including disrupting key transportation routes, driving up raw material costs, and dampening market expectations.
This will cause a chain reaction across the global supply chain: production cuts, scrambled shipments, and restructuring.
Supply-side shutdowns are occurring: Geopolitical risks combined with raw material shortages have led multiple petrochemical plants in South Korea, Europe, Thailand, and other regions to announce production cuts, affecting products such as ethylene, polypropylene, and polyvinyl chloride.
Logistics costs are rising sharply: To cover the risks of unauthorized transport, several foreign shipping companies have begun charging emergency conflict surcharges of $1,000 to $3,000 per container. Simultaneously, some air freight routes have also started raising prices.
The supply chain is being forced to restructure: In the long term, to mitigate the geopolitical risks of a single node, companies may shift from a globalized layout pursuing ultimate efficiency to a regionalized and modular development that balances efficiency and security, building more resilient supply chains by increasing safety stock and diversifying supply sources.
