An industry research report published on the 7th by IBK Investment & Securities concludes that the Middle East conflict is delivering a simultaneous supply shock to two critical feedstocks for the global detergent industry: LAB (linear alkylbenzene) and NP (normal paraffin). The brokerage also argues that Isu Chemical, which produces both materials within a vertically integrated structure, is well placed to benefit.
According to the report, approximately 575,000 tonnes of LAB production are directly affected by disruptions in Saudi Arabia, Iran, and Qatar — equivalent to roughly 15% of projected global demand in 2026. The causes are compounding: a shutdown of facilities in Saudi Arabia's Jubail industrial city, a halt to Iranian LAB and NP exports, disruption to Qatari LAB shipments, and damage to the Pearl GTL plant in Qatar. Together, these have sharply curtailed the flow of Middle Eastern supply to the rest of the world.
What makes the situation particularly acute is that the supply shock is striking both raw materials and finished products simultaneously. When LAB production cuts occur inside the Middle East, the NP that had been consumed internally never reaches external markets. Meanwhile, reduced commercial NP volumes from Qatar, Taiwan, and elsewhere are feeding directly into lower operating rates at LAB producers in Spain, Indonesia, and China — all of which rely on imported NP. The sequence is self-reinforcing: NP prices rise first; LAB producers unable to secure feedstock then curtail output; and LAB prices follow with a lag. The result is a cascading tightening of supply across the entire chain.
This dynamic is consistent with historical precedent. Past data on LAB and NP prices in South Korea show that major geopolitical events or feedstock supply shocks have previously triggered price surges of several hundred dollars per tonne. Notable episodes include the aftermath of the Gulf War in the early 2000s, the Arab Spring in 2011, and the Russia-Ukraine war in 2022. IBK Investment & Securities argues that the current shock is more severe than any of those precedents, precisely because it is disrupting both feedstocks and finished products at the same time.
The brokerage does not expect a swift normalisation. Physical repair of damaged NP production facilities could take several months or more. Even once logistics resume, detergent and LAB producers are likely to rebuild safety inventories first, absorbing any initial production increase before spot supply loosens. Furthermore, buyers are expected to reduce their dependence on single Middle Eastern suppliers by broadening long-term contracts and diversifying sourcing — a shift that could sustain a prolonged supply-security premium for non-Middle Eastern producers.
Isu Chemical is identified as the primary beneficiary. The company manufactures both NP and LAB in-house, meaning it is largely insulated from the external NP procurement disruptions hitting its competitors. The firm is reported to be running at 100% utilisation. IBK Investment & Securities argues that as rivals cut output, Isu Chemical's combination of full capacity operation and rising selling prices could sustain an extended period of improving profitability.
There are, however, meaningful risks to this optimistic scenario. An early end to the Middle East conflict, or faster-than-expected repairs to damaged facilities, could limit the supply shock to a brief window. History shows that sharp price rallies caused by Middle Eastern supply disruptions have frequently reversed just as quickly. Looking further ahead, global NP supply-demand projections suggest additional capacity will come on stream from 2027–28, which may prevent the current tight market from becoming a structural, long-term condition.
Isu Chemical's vertical integration is a genuine competitive advantage, but translating that into improved financial results requires that selling price increases outpace any rise in costs, and that global customers do not redirect demand elsewhere. It is also worth noting that IBK Investment & Securities stopped short of issuing a specific price target or investment rating in this report. Investors should additionally consider whether optimism about the favourable industry backdrop has already been reflected in the share price.
Background: LAB is the primary feedstock for household detergents — including laundry and dishwashing products — with global annual demand of roughly 3.8 million tonnes. NP, the key input for LAB production, is concentrated in the Middle East and parts of Asia, making it structurally vulnerable to geopolitical risk, a weakness long acknowledged by the industry. The current episode represents a materialisation of that vulnerability, and is likely to accelerate broader discussions about diversifying detergent supply chains — a development with significant implications for the industry's structure as a whole.