OVER THE weekend, tensions in the Middle East escalated after Houthi military leaders signalled plans to formally enter the ongoing conflict.
The ripple effects were quickly felt in the fertiliser market, where urea prices surged by about 12.78% in just one day, climbing from USD665 to USD750 per metric tonne.
On a broader view, prices have risen 28.9% month-to-date for March.
Given that urea remains a critical input for crop yield optimisation and is not easily substitutable, buyers responded by accelerating procurement activity, resulting in a wave of precautionary purchasing.
“The combination of supply uncertainty and inelastic demand has therefore amplified price volatility, reinforcing the presence of a supply-driven risk premium within fertiliser markets,” said MBSB Research.
In parallel, methanol prices also trended higher, registering an increase of approximately 4.5% over the same day which than saw prices appreciating by 29.8%mtd for the month of March.
While the price movement observed is broadly in tandem with Urea, this upward trajectory reflects broader tightening conditions across the chemical derivatives segment, as feedstock constraints begin to permeate downstream markets.
Against this backdrop, cost competitiveness becomes an increasingly important differentiating factor.
“In this regard, Petronas Chemicals is relatively well positioned, supported by its structural advantage of securing feedstock at comparatively lower and more stable prices under long-term arrangements with its parent,” said MBSB.
This cost structure provides a degree of insulation against short-term feedstock price volatility, potentially allowing the company to maintain margin resilience amid rising input costs across the broader industry.
In such a scenario, a broader and more sustained conflict would likely exert continued upward pressure not only on feedstock prices, but also across petrochemical derivatives, as supply disruptions persist and production costs adjust accordingly.
Against this backdrop, Petronas Chemicals is expected to be a relative beneficiary, supported by its access to competitively priced feedstock. “Accordingly, we are Upgrading this stock to a BUY,” said MBSB. —Apr 1, 2026
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