European chemical prices may rise because of the conflict in the Middle East, but many contract prices for March were already settled last week. Higher feedstock costs will squeeze producers' margins, at least on paper, although most are integrated into downstream products where pricing could be more dynamic in March.
A surge in feedstock costs further complicated already difficult negotiations for the March ethylene monthly contract price (MCP). The market typically looks back at the month average for naphtha prices in the previous month, which in February was €477/t and €31.5/t higher than January. The MCP was eventually agreed today at a €50/t, more than the average increase but unlikely to recover the increase in costs for producers if gains in naphtha pricing are sustained. Ethylene consumers will struggle to absorb the larger price increase unless and until downstream product prices rise.
Market participants settled March contract prices for propylene, butadiene and benzene at the end of last week, before the escalation in conflict and feedstock costs. Argus has not heard of any approaches to renegotiate these settlements so far.
Spot prices for benzene and styrene jumped by $50-80/t this morning as a knee-jerk response to the $5-6/bl spike in Brent crude. Prompt availability of both products in Europe is tight and any potential disruptions to trade flows, particularly for styrene coming from Saudi Arabia, could further constrain the markets. Northwest Europe's styrene imports from the Middle East, mainly Saudi Arabia, reached 340,062t in 2025, latest GTT data show.
It's too early to say if demand for domestic chemical production could increase because of disruption and higher costs for the import of downstream products from the Middle East and Asia. Significant volumes of polymers and some intermediates are imported to Europe, and a rise in crude prices will feed through to most chemical markets in one way or another. But the prices of products would have to increase sharply across the value chains to cover the higher costs if producers are to increase operating rates.
A renewed spike in European energy costs will also be of concern to European chemicals producers if gas supply is disrupted.
