By Andrew Miller
After struggling in recent years, American chemical manufacturers are finally catching a break.
Aside from the latest loan program from the Small Business Administration that’s making it easier to secure funding, a new geopolitical event is boosting profits for US-based chemical makers.
It starts with polyethylene, the world’s most widely used plastic. It’s used in plastic bags, food containers, water bottles, water and gas pipes, storage containers, toys, and even surgical implants.
After Covid-19, overproduction and reduced demand led to a longtime price slump. That just changed nearly overnight.
The ongoing conflict in Iran has led to the shutdown of the Strait of Hormuz, a crucial shipping lane in the Persian Gulf. As a result, supply chains have been interrupted for chemical producers from Asia, the Middle East, and Europe.
The Middle East, which accounts for 20% of the global supply of polyethylene, has cut production. In addition, Asia and Europe saw output drop after losing access to crude oil from the Persian Gulf needed for production.
American manufacturers, meanwhile, sit on an abundance of cheap domestic natural gas. With foreign competitors cut off from the raw materials they need, US producers are ramping up both output and prices.
Titans of industry like Dow raised the price of polyethylene 30 cents higher for April. That’s double what they initially planned. The chemical company is running several production facilities near full capacity and expects to maintain that pace through the rest of 2026. Its share price is up 77% this year.
This advantage over competitors won’t last forever. Even after an end to the conflict in Iran, chemical plants in the Persian Gulf could take eight to nine months to recover. That still leaves a meaningful window of opportunity for US manufacturers at every scale.
For small businesses manufacturing goods in the US, consider taking advantage of the latest “Made in America Loan Guarantee” to upgrade equipment and modernize facilities.
If you’re a manufacturer looking to move quickly, access to capital is the first question to answer. Signet Capital Group works with small and mid-sized businesses to find the right financing structure: whether that’s an SBA loan or something more tailored to your situation. Contact us now to explore your options.
The businesses that come out ahead after disruptions like this aren’t always the biggest. They’re the ones that moved while others were still waiting. If this window looks like the right moment to upgrade equipment or expand capacity, it’s worth a conversation.