Guotai Haitong: The ongoing geopolitical conflicts in Iran may have a significant impact on the balance of supply and demand for fertilizers.

Guotai Haitong released a research report stating that at the end of February 2026, the United States and Israel launched a military strike against Iran, leading to Iran immediately blocking the Strait of Hormuz and attacking a US military base. This triggered a violent shake-up in the global energy and chemical markets, causing oil prices to rise from $70.75 per barrel to $91.98 per barrel, a 30% increase. Due to concerns about future raw material supplies, Asian refineries are gradually reducing their loads. In the chemical industry, the Strait of Hormuz accounts for 35% of global urea, 33% of synthetic ammonia, and 45% of sulfur transport, and if the uncertainty in the Middle East situation continues, the global fertilizer supply and demand market balance may be greatly affected. In terms of price differentials, after the conflict erupted, the differentials for coal-based ethylene, acrylic acid, maleic anhydride, purified phosphoric acid, MMA, and coal-based propylene widened significantly, while the differentials for ethylene oxide, polyethylene, polypropylene, and ethylene glycol shrank significantly. The main viewpoints of Guotai Haitong are as follows: Middle East tensions continue to ferment, international oil prices continue to rise At the end of February 2026, the United States and Israel launched a military strike against Iran, leading to Iran blocking the Strait of Hormuz and attacking a US military base, causing violent upheavals in the global energy and chemical markets, with the prices of crude oil and downstream chemical products significantly increasing. From February 26th to March 12th, the closing price of Brent crude oil rose from $70.75 per barrel to $91.98 per barrel, a 30% increase. Concerns about future raw material supplies, Asian refineries gradually reducing their loads Affected by the situation in the Middle East, the blockade of the Strait of Hormuz has caused refineries to become more concerned about future raw material supplies. Several large integrated refining and chemical enterprises in Asia are adjusting or planning to reduce their loads due to concerns about tight raw material supplies. In South Korea, in addition to the established PX unit maintenance plan of S-Oil for 800,000 tons, SK, Hanwha, and GS companies also expect reduced load operations of their PX units; Japan has not yet announced a production cut plan. Domestically, units affected by raw materials are preparing to reduce their loads, impacting the supply of PX; units such as Zhejiang Petrochemical, Quanzhou Refining and Chemical, Fujian Joint Petrochemicals, and Ningbo Daxie have reduced their loads, while Taiwan has not yet announced a production cut plan. Global supply and demand for chemical products are also affected by the Middle East conflict The Strait of Hormuz carries 35% of global urea, 33% of synthetic ammonia, and 45% of sulfur transport. The alternative transport routes have extremely limited capacity, covering only about 20% of normal capacity. If the uncertainty of the Middle East situation continues, the global fertilizer supply and demand market balance may be significantly impacted. Chemical product price differentials fluctuate From February 28th to March 12th, the price differentials for coal-based ethylene, acrylic acid, maleic anhydride, purified phosphoric acid, MMA, and coal-based propylene have expanded significantly, with increases of +1009%, 465%, 411%, 131%, 117%, and 104%, respectively, all exceeding 1000 yuan per ton. The differentials for ethylene oxide, polyethylene, polypropylene, and ethylene glycol have shrunk significantly, with decreases of -89%, -272%, -321%, and -1217%. Risk warning: Significant fluctuations in oil prices; policy outcomes not meeting expectations, etc.