Jinan Zhuocheng Bio-Tech Co., Ltd.

Recent developments in the global raw material market have been driven by a combination of geopolitical tensions, energy price fluctuations, and rising demand from emerging industries. Among these factors, the evolving situation in the Middle East has become a major variable affecting energy and chemical markets, while certain segments, particularly new energy materials, have experienced independent structural growth opportunities due to supply-demand imbalances.

Industry analysts believe that global raw material markets are entering a new phase of structural adjustment, with companies paying increasing attention to supply chain security, regional manufacturing strategies, and the development of high-value-added products.

Middle East Tensions Disrupt Energy and Chemical Markets

The recent escalation of geopolitical tensions in the Middle East has become a key factor influencing global raw material markets, especially due to uncertainty surrounding transportation routes such as the Strait of Hormuz.

In July, intensified tensions between the United States and Iran raised concerns over potential disruptions to energy supplies. The impact quickly spread across the petrochemical value chain, with reduced PX (paraxylene) imports and declining operating rates in related industries.

The PTA (purified terephthalic acid) sector was particularly affected. In early August, industry operating rates dropped to approximately 52.53%, reaching a relatively low level in recent years, while inventories continued to decline.

However, market sentiment shifted rapidly in early August as expectations of a temporary agreement on the Strait of Hormuz increased. International crude oil prices fell sharply, with Brent crude dropping below USD 80 per barrel on August 5. Domestic energy and chemical products, including crude oil futures, ethylene glycol, and PTA, also experienced significant price declines.

Market participants noted that the energy and chemical sectors are currently fluctuating between supply disruption risks and the fading of geopolitical risk premiums. Even if regional tensions ease, previous supply losses may require a long recovery period, meaning tight supply conditions for some products may continue in the short term.

New Energy Materials See Structural Growth Driven by Supply Shortages

While traditional energy and chemical markets remain volatile, certain new energy materials have demonstrated strong growth momentum due to tightening supply-demand conditions.

Lithium battery electrolyte additive VC (Vinylene Carbonate) has recently become a market focus.

As of August 3, the average VC price had surged to approximately RMB 229,900 per ton, representing an increase of more than 60% within slightly over one month.

The price increase has been driven by both demand growth and supply constraints.

On the demand side, stricter battery safety standards implemented from July 1 have increased requirements for battery performance, leading to higher VC usage ratios. Meanwhile, rapid growth in the energy storage battery market has further expanded demand. Domestic energy storage battery shipments increased by 139% year-on-year in the first quarter, and these batteries typically require higher VC consumption, further widening the supply gap.

On the supply side, stricter purity requirements under the new standards have accelerated the elimination of low-quality production capacity. In addition, VC production is subject to hazardous chemical regulations, meaning effective supply is significantly lower than nominal capacity. The supply shortage is therefore difficult to resolve in the short term.

Global Supply Chain Restructuring Creates New Opportunities for Raw Material Companies

The global raw material market is undergoing a transition from price-driven competition toward supply chain capability-driven competition.

On one hand, rising geopolitical risks are encouraging companies to strengthen supply chain resilience and regional production capabilities. On the other hand, demand growth in new energy, advanced chemicals, and specialty materials is creating new opportunities for companies with technological advantages and reliable production capacity.

For API manufacturers, pharmaceutical intermediate suppliers, and related chemical enterprises, future competitiveness will depend not only on cost advantages but also on:

• Establishing international supply networks;
• Upgrading product portfolios;
• Developing high-value specialty products;
• Improving global customer qualification capabilities.

Industry experts believe that companies with strong technological barriers, stable supply capabilities, and global market strategies will be better positioned to benefit from the next phase of industrial restructuring.

Looking ahead, global raw material markets will continue to be influenced by geopolitical developments, energy prices, emerging industry demand, and supply chain transformation. Market differentiation is expected to intensify, making innovation, resilience, and global strategic positioning increasingly important for enterprises seeking long-term growth.