Takeaways From Expert Call on Asian Petchem Feedstock Supplies / Optionality

Research evidence excerpt

Takeaways From Expert Call on Asian Petchem Feedstock Supplies / Optionality

May 18, 2026 | 08:06 ET~

US Chemicals

Takeaways From Expert Call on Asian Petchem US Chemicals

Feedstock Supplies / Optionality John P. McNulty, CFA Analyst

john.mcnulty@bmo.com (646) 946-8428

Bhavesh Lodaya Analyst

Bottom Line: bhavesh.lodaya@bmo.com (347) 274-1393

We spoke with Zengwei Yin, CMA's expert on China/Asia. Our key topic of discussion Caleb Boehnlein Senior Associate

surrounded the disconnect in global petrochemical pricing, and why Asian (primarily caleb.boehnlein@bmo.com (347) 906-1860

Chinese) petchem prices remain soft despite severe Middle Eastern supply disruptions Margarita Margulis Associate

that have driven up prices in the U.S. and Europe. In this report we look at the margarita.margulis@bmo.com (332) 257-0592

various dynamics that enable China broadly to maintain its production despite the ME Legal Entity: BMO Capital Markets Corp.

disruptions.

In our view, the overall takeaway after discussing all these dynamics is that there

appears to be no sense of urgency or panic currently in the Chinese domestic markets,

and most industry participants there appear to not be too worried about the ME

disruptions in the near- to mid-term.

Key Points

10 Days of Strait Close = 1 Day of Chinese Feedstock Inventory Reduction: The

expert provided an interesting view on the real, on the ground, impact of the closure

of the Strait. In his view, the primary reason China has avoided the severity of the price

spikes is largely the sheer volume of inventory built up across its petrochemical value

chain - expected to be well over a month's worth of feedstock inventory. Given all the

moving pieces, he noted that for every 10 days the Strait of Hormuz is effectively closed