Heightened geopolitical tensions are driving a collective surge in the main futures contracts for domestic chemical products, with multiple varieties experiencing simultaneous gains. Market momentum continues to build. Expectations of pressure on import supplies and the pass-through effect of rising product prices are further boosting market sentiment. Analysts at Dongxing Securities suggest that the conflict involving Iran has sparked concerns over potential disruptions to crude oil and bulk chemical supplies, which could lead to significant short-term price volatility for related products. On March 3rd, several major chemical futures contracts saw substantial increases. The main methanol contract hit its upside limit for two consecutive trading sessions, while main contracts for plastics and polypropylene also reached their daily limits. The main benzene contract rose by 6.76%. This broad-based rally in chemical prices is primarily attributed to market apprehensions regarding import availability stemming from the tense Middle East situation. According to data from Longzhong Information, as of February 2026, Iran's methanol plant capacity totals 17.39 million tons per year, accounting for 59.78% of the total methanol capacity in the Middle East and 22.86% of international methanol capacity (excluding China). Regarding other products, Iran's urea exports in 2024 were approximately 4.5 million tons, ranking third globally. Chemicals with high import dependency, such as sulfur and strontium carbonate, may also be affected by geopolitical factors. The fertilizer market is facing severe supply risks, primarily due to escalating Middle East tensions and shipping disruptions in the Strait of Hormuz. QatarEnergy has suspended production of some chemical products and metals after attacks by Iran forced the shutdown of its major liquefied natural gas (LNG) plant. The company stated it would halt production of downstream products including urea, polymers, methanol, and aluminum. Analysts at Kpler noted that while global attention is focused on soaring oil and gas prices, another commodity crisis is brewing. Information from the data firm indicates that the Middle East Gulf region supplies about 16% to 18% of global fertilizer trade volumes, with Saudi Arabia, Qatar, and the United Arab Emirates being major exporters. Currently, uncertainty over the safe passage of fertilizer carriers through the Strait of Hormuz, coupled with changes in maritime insurance conditions, poses risks to short-term supply. With limited supply sources and a lack of alternative shipping routes, the global fertilizer market is under significant pressure from the expanding crisis. Following attacks on Iran involving the US and Israel, risk aversion has noticeably increased in European financial markets. As one of the world's top three LNG exporters, Qatar ships almost all its LNG through the Strait of Hormuz, accounting for about 20% of global supply. Dongxing Securities believes the conflict involving Iran raises concerns about supply disruptions for crude oil and bulk chemicals, potentially causing sharp short-term price swings. An Industrial Securities research report suggests that against the backdrop of escalating geopolitical tensions, markets may worry about domestic production facilities being affected, leading to actual output losses. Furthermore, disruptions in transportation could result in reduced actual arrivals of imported cargoes and related expectations, potentially driving up prices for relevant products. Dongxing Securities points out that, given Iran's abundant oil and gas resources, it holds an industrial advantage in certain bulk chemical sectors and exerts a significant influence on the global supply chain. A previous Guotou Junan Securities report indicated that the first phase of valuation recovery, based on weak current fundamentals and strong expectations, has concluded. It is anticipated that the market will enter a second phase after the holiday period, focused on verifying actual price increases. In the short term, it is recommended to closely monitor the dye industry chain and TMP. During the traditional peak demand period of March and April, opportunities may exist in chemical products for the textile and apparel chain with low inventory levels (such as polyester filament, viscose staple fiber, and bottle chips), as well as flexible products within the phosphorus chemical sector (like industrial monoammonium phosphate, yellow phosphorus, and phosphoric acid). China Securities (CSC) released a report stating that after a period of capital accumulation over the past six months, the chemical sector now has relatively ample liquidity and high market enthusiasm, meaning even minor positive catalysts could lead to significant stock price gains. At this stage, stock selection acumen becomes crucial, and it is expected that themes related to price increases and the dual-carbon goals will regain market favor in the first half of the year. If the Producer Price Index (PPI) turns positive by mid-year, an upward trend driven by supply-demand reversals in major product categories could potentially fuel a primary earnings upswing in the second half of the year.

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