PT Chandra Asri Pacific, Indonesia’s largest petrochemical producer, has invoked force majeure on shipments to key Asian markets due to disruptions from the ongoing Iran conflict. The move threatens global supply chains for ethylene and polypropylene, amplifying volatility in energy and chemical derivatives.
- PT Chandra Asri Pacific invoked force majeure on ethylene and polypropylene exports from Java plant
- Annual polyolefin production capacity: 1.2 million metric tons
- Crude oil futures (CL=F) rose to $89.70/bbl; Brent (BZ=F) at $92.40/bbl
- VIX (^VIX) surged to 28.6 from 19.4 in one week
- Polypropylene spot prices up 14% in Asia over three days
- Supply chain disruptions linked to Strait of Hormuz instability
PT Chandra Asri Pacific has formally declared force majeure on its ethylene and polypropylene exports from its integrated plant complex in Cilegon, Java, citing operational risks linked to heightened regional instability from the Iran conflict. The company, which produces approximately 1.2 million metric tons of polyolefins annually, halted shipments to customers in Japan, South Korea, and China starting March 1, 2026. The disruption follows a sharp rise in maritime risk across the Strait of Hormuz, with shipping lanes affected by increased military activity. Chandra Asri reported that its supply chain dependencies on crude imports via the Indian Ocean—particularly from the Middle East—have been compromised, leading to delayed feedstock deliveries and insufficient processing capacity. This has forced the company to suspend operations at two of its four major polymer units. Market indicators reflect growing strain: Crude oil futures (CL=F) rose 3.2% to $89.70 per barrel, while Brent crude (BZ=F) climbed to $92.40, signaling supply concerns. The Chicago Board of Trade’s corn futures (ZC=F) also saw a 1.9% spike due to indirect feedstock impacts on chemical derivatives. Volatility in equity markets rose sharply, with the VIX (^VIX) surging to 28.6 from 19.4 in the previous week. The ripple effects are already visible in Asian chemical markets, where polypropylene spot prices have jumped 14% over three days. Buyers in India and Vietnam are now seeking alternative suppliers, increasing competition and pricing pressure. The disruption underscores how regional geopolitical tensions can rapidly impact global commodity flows, particularly in energy-intensive, globally integrated industries.