Geopolitical Risks in the Middle East Escalate: An Analysis of the Impact on the Acrylic Market

March 3rd, according to the news

This round of acrylic acid price increase was triggered by the rise in the costs of crude oil, propane, and propylene due to geopolitical risks in the Middle East, rather than being driven by a shortage in production capacity. The market situation is characterized by a short-term strong trend, a pulse-like price increase, and weak sustainability. The turning point for prices will be determined by the trend in oil prices, the cessation of raw material price increases, and the willingness of downstream buyers to accept deliveries.

I. Overview of Market Performance

As of March 3, 2026, the benchmark price of acrylic acid in China is 6,583.33 CNY per ton, an increase of 3.67% compared to the beginning of this month (6,350.00 CNY per ton).

In the same period, the spot price of propylene in East China was 6,480 CNY per ton, up 30 CNY per ton from the previous week. PDH costs ranged from 6,800 to 7,000 CNY per ton, reflecting a continued rise in cost pressures. Brent crude oil prices surged to between $65 and $75 per barrel, driven by geopolitical premiums. The Strait of Hormuz handles 20% to 30% of global seaborne crude oil trade, and the energy supply chain is expected to tighten further. China’s total acrylic acid production capacity stands at approximately 4.4 million tons per year, with a self-sufficiency rate approaching 100%. Meanwhile, the Middle East’s acrylic acid production capacity is only 400,000 to 450,000 tons per year, accounting for less than 5% of global output, thus exerting minimal direct impact on the Chinese market.

II. Cost Side

Acrylic acid production mainly uses the propylene oxidation process, with raw material costs accounting for over 60%, and cost transmission is rigid. The geopolitical conflicts in the Middle East have pushed up the prices of crude oil and LPG, driving up the prices of raw materials such as propane and naphtha, which in turn increases the cost of propylene and transmits it to acrylic acid, causing the market to follow the price increase passively. In China, the PDH route has a high proportion, making it sensitive to the supply and logistics of propane from the Middle East. The rapid conversion of energy end risk premium into cost support is the core driving force behind this round of price increases.

III. Supply Side

The Middle East is not the main production area for acrylic acid globally, and there is no immediate risk of supply disruption to the Chinese market. The overall supply situation remains relatively loose. However, the potential disruptions from geopolitical risks cannot be ignored. If navigation through the Strait of Hormuz is restricted, it will directly affect the logistics efficiency and supply expectations of global LPG and propylene, driving up international fuel and chemical raw material prices, and indirectly increasing the cost pressure on Chinese acrylic acid companies. Currently, the industry's operations are stable, with ample supply in China. The price increase is not due to a reduction in supply but rather the result of both cost-driven factors and companies maintaining higher prices.

IV. Demand Side

The Middle East is not a major production area for acrylic acid, and China currently does not face a direct risk of supply disruption, with overall supply remaining loose. However, if navigation through the Strait of Hormuz is restricted, it will affect the global logistics and supply expectations of LPG and propylene, driving up international raw material prices and indirectly increasing cost pressure on acrylic acid in China. Currently, the industry is operating smoothly with ample supply, and this round of price increases is not due to a contraction in supply, but rather a combination of cost-driven factors and companies maintaining prices.

V. Subsequent Market Trends

Under the baseline scenario, if the conflict remains limited and shipping operations proceed normally, oil prices are expected to fluctuate in the range of $65–75 per barrel. The price increase for acrylic acid is forecast to be between 5% and 10%, lasting for 2–4 weeks, after which prices will gradually stabilize and decline as downstream demand begins to wane. If the Strait of Hormuz were to close temporarily for 1–2 weeks, oil prices could rise to $80–90 per barrel, causing acrylic acid prices to jump by 15%–25%. This strong market condition would likely persist for 4–8 weeks before gradually easing as tensions subside. Should a prolonged conflict occur, disrupting raw material supplies for more than one month, oil prices could break above $90 per barrel, and the price increase for acrylic acid could exceed 30%. The duration of this upward trend would extend to 3–6 months; however, the probability of this scenario unfolding is relatively low.

In summary, the primary risks currently facing the market are concentrated on an unexpected escalation of geopolitical conflicts, significant fluctuations in oil prices, excessive downward pressure on downstream profits leading to reduced capacity utilization and production cuts, and the introduction of new production capacity that could push the industry back into a state of oversupply. Going forward, it will be crucial to closely monitor three key indicators: Brent crude oil prices, spot prices for propylene in East China, propane/CP prices, and changes in PDH profitability.