Shanghai Semitech New Material Co., Ltd.
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Market Report
Chemical Raw Material Price Surge 2026: Why Costs Won’t Come Back Down
Prices were already rising before the US-Iran conflict. Here’s why this bull cycle has structural legs — and how to protect your procurement margins.
Oil Market Snapshot — April 23, 2026
Brent crude futures surged more than 3% intraday, briefly touching $106/barrel. WTI climbed 4% to $97/barrel. Since the US-Iran conflict began on February 28, Brent has risen 46% cumulatively — with the March 9 peak representing a 65% move from the pre-conflict level.
KEY CONTEXT
Many buyers attribute this rally solely to the Strait of Hormuz blockade. The data tells a different story: domestic chemical prices were already climbing before geopolitical tensions escalated.
Section 1 — Prices Were Rising Before the Conflict
Between January 1 and February 27, 2026 — before the US-Iran conflict broke out — more than 100 domestic chemical raw materials had already recorded meaningful price increases. Lithium hydroxide, lithium chlorite (battery grade), and both industrial- and battery-grade lithium carbonate were up 40–50%. International crude oil was flat during that same window.
| Material | Price Change (Jan 1 – Feb 27) | Category |
|---|---|---|
| Lithium Hydroxide (battery grade) | +45% | Battery materials |
| Lithium Carbonate (battery grade) | +42% | Battery materials |
| Lithium Carbonate (industrial grade) | +40% | Battery materials |
| Select chemical commodities (peak) | +300% | Broad chemicals |
The geopolitical conflict is an accelerant, not the root cause. The chemical raw material sector had already entered an upswing cycle independently.
Section 2 — Three Structural Reasons Prices Will Stay Elevated
- Oil infrastructure damage takes time to repair: Production facilities in parts of the Middle East were damaged during the conflict. Even after a ceasefire and full reopening of the Strait of Hormuz, restoring output capacity will take months — sustaining a supply gap.
- Accelerating strategic petroleum reserves globally: The conflict has prompted multiple nations to fast-track strategic stockpiling. This sustained buying pressure keeps markets tight well beyond the immediate crisis.
- China’s policy shift toward price stability: The 2025 Central Economic Work Conference explicitly listed “preventing sustained price declines” as a priority for the first time. This reduces the likelihood of administrative price suppression and raises the policy floor for raw material costs.
BOTTOM LINE
High oil prices are the new baseline. Chemical raw material prices are unlikely to return to 2025 lows. Procurement teams should budget accordingly and adjust sourcing strategy now rather than waiting for a correction that may not come.
Section 3 — How Chemical Buyers Should Respond
- Staggered purchasing over single large orders: High volatility makes large single purchases risky. Batch buying averages cost and reduces exposure to short-term price spikes.
- Map alternative raw materials now: For materials with the steepest increases, evaluate substitutes in advance to reduce single-source dependency.
- Negotiate framework agreements with suppliers: Lock partial volume at agreed price bands. Long-term partnerships provide a buffer against extreme market moves.
- Track silica feedstock separately: DMC, silicone oil, and silica raw materials have partial crude oil linkage but are also shaped by domestic capacity and environmental policy. Treat them as a distinct category in your cost model.
Frequently Asked Questions
Will prices fall after the Strait of Hormuz reopens?
Unlikely in the short term. Oil infrastructure repairs take months, strategic stockpiling continues globally, and domestic chemical cycles were already in an upswing before the geopolitical trigger. A return to 2025 price levels is a low-probability scenario.
Does this price surge affect silica matting agents?
Indirectly, yes. Fumed and precipitated silica production consume HCl, H₂SO₄, and SiCl₄ — all energy- and feedstock-sensitive inputs. Rising costs pressure ex-factory matting agent prices upward. Buyers should discuss framework pricing with suppliers to lock costs ahead of further moves.
Is now a good time to purchase chemical raw materials?
In a high-volatility market, waiting for the bottom carries its own cost. A staggered buying strategy — batch purchasing combined with partial price locks — averages cost more reliably than market timing.