Amidst the outbreak of conflict in the Middle East, executives at a U.S. fertilizer manufacturer have cashed out more than $30 million as the company's stock price surged. The share price has been significantly boosted by the firm's access to low-cost American natural gas. Global energy markets remain volatile due to risks to energy facilities in the Gulf region and the "de facto closure" of the Strait of Hormuz, severely impacting industrial supply chains and leaving natural gas prices in Asia and Europe far above those in the United States. Natural gas is a key feedstock for producing nitrogen fertilizers like urea and ammonia, which support approximately half of the world's food production.

Headquartered in Illinois, CF Industries (CF.US) has emerged as an early winner following the onset of hostilities. Its stock has climbed 25% since the conflict began, ranking third among S&P 500 index constituents for gains. The company's facilities in Louisiana—including the world's largest ammonia production site—are located about 60 miles from a major U.S. natural gas trading hub. Last Friday, the price at this hub was around $3 per million British thermal units, compared to approximately $22 for the Asian benchmark JKM. Regulatory filings indicate that over the past three weeks, CF Industries insiders have sold company shares totaling $33.4 million.

Last week, a U.S. agricultural coalition filed a lawsuit against several fertilizer companies, alleging collusion to raise prices, with CF Industries named among the defendants. Responding to the litigation, the company stated, "We have received the complaint and deny these baseless allegations. The company will vigorously defend itself." In its annual report released last week, CF Industries acknowledged that its "access to low-cost and abundant natural gas resources" provides a structural advantage in an industry where global product prices are often set by high-cost natural gas producers.

Meanwhile, the share price of LyondellBasell, a chemical company listed in the U.S., has increased 26% since February 28. Morgan Stanley estimates that the de facto closure of the Strait of Hormuz has affected about 9% of global plastic trade flows. At a J.P. Morgan industrial conference on Tuesday, LyondellBasell's Chief Financial Officer, Agustin Izquierdo, stated that the conflict involving Iran has driven up prices for its products, such as polyethylene used in packaging and polypropylene for automotive parts and medical devices.

North American petrochemical plants typically utilize lower-cost domestic natural gas liquids like ethane, which have remained relatively stable since the conflict began. In contrast, plants in Europe and Asia rely more heavily on naphtha, the price of which has risen sharply in recent weeks. J.P. Morgan analysts noted that over 50% of Asia's naphtha supply originates from the Middle East, forcing petrochemical producers in Japan and South Korea to reduce output. Izquierdo mentioned that a $100 per ton increase in polyethylene prices could boost LyondellBasell's profits by approximately $320 million, adding, "We still have 5% to 10% additional capacity we can bring online, which is clearly very beneficial for us."

Ross Eisenberg, a leader of a U.S. plastics manufacturing industry group, pointed out, "U.S. chemical and plastic manufacturers are in a more favorable position compared to the rest of the world because we rely on domestic shale gas." However, he also cautioned, "If the conflict persists long-term and reduces global oil and gas supplies, even the U.S. shale advantage could face ripple effects, potentially driving up input costs required for plastic and petrochemical production."