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Middle East Tensions Drive Raw Material Price Surge, Ineos Second-Quarter Profit Triples

Plastmatch Global Digest 2026-07-28 10:09:15

The two major petrochemical holding companies under INEOS Group reported a significant surge in second-quarter earnings. INEOS said that the conflict in the Middle East altered the regional supply-demand balance, product prices, and profit margins, driving higher profits across all of its businesses.

Ineos Group Holdings SA, whose main businesses include its North American and European olefins and polymers (O&P) operations and chemical intermediates business, said in an operating update released on July 23 that the conflict “had a significant impact on regional supply-demand balances this quarter.”

The briefing noted that export volumes from the Middle East declined sharply, leading to raw material shortages that in turn weighed on production in Asia. Ethane prices remained low, highlighting the cost advantage of the North American market and significantly expanding profit margins. In Europe, “the impact from imported supplies eased markedly, and product prices and profitability improved accordingly.”

Ineos Quattro Holdings Ltd., which operates Inovyn ChlorVinyls Ltd., INEOS’s chlorvinyls, acetyls and aromatics businesses, issued a separate operating update on July 24. INEOS said the outbreak of war in the Middle East triggered market concerns over supply, driving up product prices and improving profitability across all of its businesses.

The market recovery began at the end of the first quarter and continued through most of the second quarter. However, as the second quarter drew to a close, the market rally lost momentum, as “supply chains were being reconfigured, and downstream customers, waiting to see whether a ceasefire would materialize, postponed purchases, resulting in weaker performance in Europe and Asia.” INEOS said that the Americas market was relatively less affected by the conflict, and all business segments delivered strong performance in the second quarter.

Profit margins have expanded significantly.

INEOS Group Holdings reported unaudited second-quarter EBITDA of €1.13 billion, more than tripling from €312 million in the same period last year and far exceeding the €421 million recorded in the first quarter.

Ineos Quattro’s unaudited EBITDA for the second quarter came in at €407 million, nearly doubling from €228 million in the same period last year and €222 million in the first quarter.

In INEOS Group’s Holdings business segment, North American Olefins & Polymers reported EBITDA of EUR 373 million in the second quarter, significantly higher than EUR 118 million in the same period last year. The company said that the ethylene market was broadly stable during the quarter, with steady domestic demand, while the conflict in the Middle East helped drive export growth. “Product prices generally rose in line with naphtha, while ethane feedstock prices remained low, leading to a substantial increase in profits this quarter; polymer demand was broadly stable.” The company added that downstream demand from the pipe market was strong, with firm market conditions.

European Olefins & Polymers EBITDA reached €452 million, compared with only €61 million in the same period last year. Supported by an industry-wide concentrated maintenance season and reduced import volumes due to the conflict, the olefins market was generally tight in supply; both butadiene and styrene saw strong supply and demand, with firm market conditions. INEOS stated that, benefiting from the ethane feedstock cost advantage of its Rafnes cracker, the segment’s profitability improved this quarter. In the European polymers market, supply and demand were balanced, demand remained stable, and lower regional import volumes drove prices and earnings higher.

Earnings hit a cyclical high.

The EBITDA for the group's chemical intermediates business reached €308 million, a significant increase from €133 million last year. In terms of specialty chemicals, the U.S. market remains strong, while the European and Asian markets continue to improve, particularly in the detergent and polyolefin sectors, with supply from the Middle East remaining constrained. The company stated that multiple product lines are operating at peak profitability levels.

In the second quarter, profitability of epoxy products also remained at a high level, with the U.S. market performing particularly strongly. The nitrile business saw improved profitability in Europe and the U.S., benefiting from very strong demand for acrylamide; the phenol business remained stable in the U.S. and European markets, but the Asian market continued to be sluggish.

INEOS Styrolution, INEOS Quattro’s styrenics business, reported EBITDA of €170 million in the second quarter, doubling year on year. Tightened supply caused by the Middle East conflict improved polymer profitability across all three regions. Reduced exports from Asia to other regions lifted both margins and volumes for ABS resins. Profits from specialty styrenics products increased, while sales volumes remained stable. The general-purpose polystyrene market environment remained weak and volumes declined, but profitability improved in all regions.

The Vinyls segment reported EBITDA of €133 million in the second quarter, compared with €70 million in the same period last year. The earnings improvement was mainly driven by the escalation of the Middle East conflict, which boosted market sentiment. “Although feedstock and energy costs rose sharply, the increase in product spreads relative to ethylene fully offset the additional production costs, leading to margin expansion, with the domestic PVC market performing particularly strongly.” “However, the rapid price increases dampened some purchasing appetite and weakened demand. As supply concerns gradually eased, the upward price trend reversed during the quarter, with export markets declining first, followed by the domestic market; caustic soda profitability followed a similar pattern.”

INEOS Aromatics’ EBITDA for the second quarter was EUR 31 million, up from EUR 23 million in the same period last year. The tightening of supply caused by the Middle East conflict led to improved profitability across all regions. Global purified terephthalic acid sales were flat quarter-on-quarter but declined year-on-year, due to PX feedstock supply constraints at Asian plants.

Acetyls EBITDA came in at EUR 73 million, compared with EUR 48 million in the same period last year. The conflict in the Middle East affected all regions globally: in Asia, acetic acid prices and profitability surged in April before gradually easing in May and June; vinyl acetate monomer prices in Asia rose rapidly, helping improve the performance of the Korean joint venture. Demand in the U.S. market remained strong, some competitors experienced plant outages, and export opportunities increased. In Europe, reduced imports from the U.S. pushed product prices up ahead of raw material costs, with profitability recovering accordingly.

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Middle East Tensions Drive Raw Material Price Surge, Ineos Second-Quarter Profit Triples

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