BMO cuts chemical sector outlook on Strait of Hormuz disruptions

BMO Capital Markets has revised its outlook for the chemical sector, citing ongoing disruptions of oil flows through the Strait of Hormuz. Despite these challenges, chemical stocks experienced a brief surge on Thursday. U.S. President Donald Trump stated on Thursday that the country would refrain from attacking Iran before the November 3 midterm elections and that productive discussions were underway with Tehran.

This followed Trump's Wednesday remarks about considering new strikes against Tehran prior to the election. The number of vessels passing through the Strait of Hormuz has plummeted to the lowest level in over two months as attacks on tankers in the waterway peaked last week since the start of the U.S.-Israeli war with Iran, according to shipping data.

This reduction in traffic has led to a significant drop in oil flows from the Middle East, as alternate routes cannot adequately compensate for the disruption. BMO Capital noted that prices for polyethylene and polypropylene have stabilized following recent increases, while U.S. acetic acid and PVC prices increased slightly.