Middle East Tensions Continue to Disrupt, Chemical Sector Sees Another Surge of Daily Limit Rises

Middle East geopolitical conflicts continue to escalate, with the supply side of the petrochemical industry chain suffering direct impacts, leading to a strong surge in A-share chemical sectors and chemical commodities. On April 7, according to Xinhua News Agency, Israel launched an airstrike on Iran's largest petrochemical complex, claiming to have "severely impacted over 85% of Iran's petrochemical export capacity" (https://www.news.cn/20260407/58f7d18c04be4dd9879c9bbf06bd9ac7/c.html). Meanwhile, according to Iran's Fars News Agency, the "Jubail Industrial City in northeastern Saudi Arabia—one of the world's important petrochemical production bases" (https://www.news.cn/world/20260407/19aafeaf798340fc88e1dbac7a849f4e/c.html) also experienced explosions due to a large-scale attack. The simultaneous attacks on the two major production areas have suddenly heightened market concerns about global petrochemical supply. Today, major futures contracts for chemical products such as ethylene glycol, methanol, and propylene in the domestic market have surged, with some reaching their daily limit. The A-share market responded in kind, with the chemical sector leading the overall market surge, and sub-sectors like chemical fibers, chemical raw materials, and petrochemicals experiencing collective breakouts. Israeli Airstrikes on Iran's Petrochemical Core Directly Hit Export Lifeline According to Xinhua News Agency, the Israel Defense Forces (IDF) stated on the 6th that the IDF carried out an airstrike on a large petrochemical complex in the Asaluyeh region of southern Iran that day. This facility is Iran's largest petrochemical complex. Israeli Defense Minister Katz also confirmed this news. The IDF statement said this strike was the second round of attacks on Iran's two major petrochemical complexes following previous operations, cumulatively causing a severe blow to over 85% of Iran's petrochemical export capacity. According to Iranian media, the oil and gas chemical plants in Asaluyeh and Parsian in Bushehr province "were attacked by enemy forces," with several explosions heard. Tasnim News Agency cited local officials stating that petrochemical production units in Asaluyeh were damaged by the attack, and the extent of the damage is currently under investigation. Jubail Industrial City in Saudi Arabia Attacked, Threatening 6% to 8% of Global Petrochemical Capacity According to Xinhua News Agency citing Iran's Fars News Agency early on the 7th, explosions occurred in the Jubail Industrial City in northeastern Saudi Arabia, which is involved with US capital, due to a large-scale attack. Jubail Industrial City is one of the world's important petrochemical production bases, with an annual output of about 60 million tons of petrochemical products, accounting for 6% to 8% of the global total output. The area hosts several large petrochemical companies, including the Sadara project, in which Saudi Basic Industries Corporation and Dow Chemical Company of the United States are involved, as well as a joint venture project between Saudi Aramco and TotalEnergies of France. Analysis suggests that the successive impacts on the two major production areas of Iran and Saudi Arabia within the same time window have significantly intensified market concerns about the stability of petrochemical supply in the Middle East. Chemical Product Futures Collectively Soar, Ethylene Glycol Hits Daily Limit The geopolitical impact has rapidly spread to the commodity market. Ethylene glycol, methanol, and propylene are all important basic chemical raw materials widely used in downstream industries such as polyester, plastics, and synthetic fibers. As the Middle East is a significant export source for these products, uncertainty on the supply side directly drives market repricing. This afternoon, the main contract for ethylene glycol on the Dalian Commodity Exchange hit its daily limit, closing at 5706 yuan/ton, an increase of about 11%. The main contract for methanol on the Zhengzhou Commodity Exchange rose by 9%, and the main contract for propylene on the Zhengzhou Commodity Exchange rose by 7% at one point. Concurrently, chemical stocks became the leading sector in the A-share market for the day, with sub-sectors such as chemical fibers, chemical raw materials, and petrochemicals showing prominent gains. The combination of supply shocks, price increase expectations, and policy catalysts propelled the chemical sector to stand out in the market on that day. Furthermore, as mentioned in a Wallstreetcn article, the impact of geopolitical tensions is gradually spreading from the energy sector to the chemical and high-end manufacturing industrial chains. Several global chemical companies have successively announced price increase plans—US chemical giant Dow Chemical doubled its polyethylene price increase to twice the previously announced level; Germany's Wacker Chemie has comprehensively raised prices for its silicone products, covering approximately 2800 items. Policy support has also emerged. Recently, seven departments including the Ministry of Industry and Information Technology jointly issued the "Action Plan for Accelerating the Renovation and Upgrading of Old Facilities in the Petrochemical and Chemical Industries (2026-2029)", proposing to complete the renovation and upgrading tasks for old facilities in the petrochemical and chemical industries nationwide by 2029, providing policy backing for the industry's medium and long-term demand.