Petronas Chemicals soars 42% following US strikes on Iran

2026-03-06 - 07:43

Petronas Chemicals’ shares surged by as much as 42.3% this week after the Iran crisis erupted and the Strait of Hormuz was closed. (Bernama pic) PETALING JAYA: Petronas Chemicals Group Bhd (PetChem) shares have surged as much as 42% since the US and Israel launched strikes on Iran last weekend. Analysts said the company is seen as a prime beneficiary of the Iran crisis as it gets its feedstock supplies from within Malaysia rather than the Middle East, where deliveries have ground to a halt following the closure of the Strait of Hormuz. PetChem shares jumped as much as 21.6% or 76 sen to RM4.27 today before paring some of its gains to settle at RM4.20 at the midday break. At this price, the group is valued at RM33.6 billion. The shares have shot up by as much as 42.3% this week, since the crisis erupted. CGS International has upgraded the company to “add” from “reduce” previously with a higher target price of RM4.45. “The key advantage is that PetChem purchases its gas feedstocks from sources within Malaysia, and does not rely on gas sourced from the Middle East. “Hence, PetChem’s Kertih O&D (olefins and derivatives) complex and its F&M (fertilisers and methanol) division are not subject to any feedstock supply disruptions arising from the ongoing war in the Middle East,” it said in a note today. The research house said PetChem benefits from favourably priced inputs, with ethane purchased at fixed and low long-term prices for its Kertih O&D complex. Following the strikes by the US and Israel, the Strait of Hormuz has been rendered impassable, locking in 20%-30% of the world’s seaborne oil, liquefied natural gas and liquefied petroleum gas trades. Iran has indicated that only Chinese vessels or vessels carrying oil or gas bound for China will be allowed to pass through the strait. Iranian drone attacks on a Saudi refinery and Qatar’s LNG production facility has further complicated the dire situation. CGS noted that with at least 8-10 million barrels per day of crude oil, or 25% of seaborne trade, and 18% of global seaborne LNG trade now inaccessible, Brent crude has jumped 17% from pre-war levels. Naphtha has surged 26% and spot LNG prices have risen more than 50%, with both naphtha and LNG serving as key petrochemical feedstocks. CGS said the impact on naphtha-based petrochemical plants will be severely negative, as they struggle to secure sufficient feedstock and have to pay much higher prices for available supplies. This could result in a 20%-25% drop in both production and demand over six to 12 months, leading to possible reduction of operating rates or shutdown of plants. It noted that beneficiaries from the crisis will be “low-cost producers in the Middle East and in the US, which have access to cheap gas feedstocks”. PetChem also falls under this category given its unique position in the Malaysian market. At its F&M division, it buys methane at prices that are pegged to the selling prices of the final products such as urea and methanol. Based on this, CGS has raised PetChem’s earnings forecasts to RM143 million in its financial year ended Dec 31, 2026 (FY2026), from a loss of RM667 million previously. PetChem is the chemical arm of national oil company Petroliam Nasional Bhd (Petronas), and is one of Southeast Asia’s largest integrated chemical producers. It operates 21 manufacturing sites and 54 production plants globally with a capacity of 16.8 million metric tonnes per annum.