KeyBanc Capital Markets has revised its petrochemical sector outlook as the Iran conflict reshapes global dynamics, upgrading Dow and LyondellBasell to Overweight while downgrading Avient to Sector Weight. Analyst Aleksey Yefremov noted that rising crude prices are lifting the global cost curve and tightening supply, with roughly 11-15% of global ethylene/PE capacity directly affected.

The firm expects several quarters of global petrochemical tightness before supply catches up, as Europe remains highly dependent on imports. Yefremov stated that LyondellBasell is positioned relatively better due to fewer assets in the Persian Gulf and MTBE exposure. KeyBanc raised estimates on both Dow and LyondellBasell, citing stronger outlooks for ethylene, propylene, polyethylene and MTBE.

U.S. polyethylene prices could rise by $0.10 per pound in coming months, with optionality for larger $0.15/lb+ increases as supply chains run on fumes. Spot export prices have already climbed $0.12-$0.15 per pound. The firm downgraded Avient on rising raw material costs and inflation-related demand risks, while maintaining Sector Weight on Eastman Chemical, citing offsets from higher housing-related costs, and highlighted partial benefits for Methanex from a tightening methanol market.