Recent market analysts have stated that the conflict between Israel and Iran has had a significant impact on the chemical industry in the Middle East. Although Israel did not directly attack Iranian chemical facilities, the indirect effects of the conflict still led Iran to shut down most of its chemical production facilities. On the other hand, Iran targeted Israel’s oil refining and petrochemical industries, forcing many production units to cease operation. Currently, although both sides are still implementing the ceasefire agreement, many chemical production facilities in the region remain shut down. The fluctuations and uncertainties in the fertilizer, raw material, and chemical markets in the Middle East are still ongoing.
The Barzan Group of Israel stated that in Israel, its refinery located in Haifa was shut down after the second missile attack by Iran. The company also said that due to an attack on a power plant, the subsidiary Carmel Olefins Company’s multiple olefin and polyolefin factories operating at the Haifa refinery were in a state of shutdown. As of now, all facilities of the company and its subsidiaries have been shut down. According to the website of Carmel Olefins Company, the company operates a steam cracking unit with an annual ethylene production capacity of 240,000 tons and a propylene production capacity of 135,000 tons. It also has a complex decomposition unit that adds an additional 180,000 tons of propylene production capacity per year, and downstream it has a 180,000-ton/year polyethylene (PE) and a 400,000-ton/year polypropylene production capacity.
Meanwhile, in Iran, Israel’s attacks on its upstream oil and gas sector, refineries, power grids and port infrastructure have also caused a large number of chemical factories to shut down. The most serious incident was that on June 14, Israeli drones attacked the gas processing facilities of the South Pars gas field, which were connected to the Iranian Asaruie chemical production center. Iranian authorities have ordered the chemical plants in the Asaruie area to stop production and remove the dangerous substances from the storage tanks to prevent further attacks. The Marjan Petrochemical methanol plant in the Asaruie area was shut down on June 15. Sources said that the methanol production capacity of the Marjan company’s plant is 1.65 million tons per year.
According to analysts from S&P Global Commodity Insights, the other three methanol plants in Iran, including the Zagros Petrochemical Plant in Assaluyeh, may also have been shut down. Market sources said that after Israel launched air strikes on Iran’s energy infrastructure, including an attack on the South Pars gas field, Iran’s methanol facilities also faced a shortage of natural gas raw materials. The sources said that ammonia plants across Iran have also suspended production. On June 16th, the production of ammonia and downstream products such as nitrogen fertilizers had been halted.
According to data from S&P Global Commodity Insights, chemicals are Iran’s third-largest export sector, trailing only crude oil and refined oil products. They account for approximately one-third of all non-oil export revenues. According to relevant data, Iran has approximately 85 chemical plants, based on abundant local raw materials, including natural gas, condensate oil, and natural gas liquids. These plants produce general chemicals and derivatives, including ethylene and polyethylene, methanol, ammonia, and aromatics. Currently, Iran has 12 cracking units, with a total annual ethylene production capacity of 7.88 million tons, making it the second-largest ethylene producer in the Middle East, accounting for 23% of the Middle East’s ethylene production capacity, second only to Saudi Arabia. Iran also has 13 methanol plants with a total annual production capacity of 17.38 million tons, and 21 polyethylene plants with a total annual production capacity of 4.45 million tons.