Blockade of the Strait of Hormuz and the bioethanol and chemicals markets in Poland
Blockade of the Strait of Hormuz - what happened and why it matters to the chemical industry
As of 28 February 2025, the Strait of Hormuz remains blocked as a result of the armed conflict in Iran. This narrow isthmus accounts for approximately 20% of global oil flows and nearly 30% of global fertiliser exports. The blockade of the Strait of Hormuz directly affects bioethanol, chemical and fertiliser markets across Europe, including Poland. Every ethanol, bioethanol or chemical producer on the continent is already feeling the consequences in their cost structures.
At IMA Polska S.A., we have analysed the impact of this conflict on our key product lines. Below are our conclusions regarding bioethanol, petrochemicals and organic fertilisers.
Bioethanol - higher oil prices increase the value of fuel ethanol
The price of crude oil at around USD 120 per barrel directly increases the market value of fuel ethanol. More expensive fossil fuels make bioethanol as a fuel component more attractive in price to blenders and refiners. This is a positive signal for bioethanol producers in Poland and Europe.
At the same time, the blockade of the Strait of Hormuz is generating cost pressures on the raw material side. The price of maize, which is the primary raw material in ethanol production, is rising in the wake of more expensive energy and fertilisers. Energy costs for fermentation and distillation processes are also going up. The ultimate impact on the margins of bioethanol producers depends on the ratio between the increase in revenue and the increase in production costs.
Producers with a diversified raw material portfolio and their own energy base - for example, based on the biogas plants - are in a better position than those fully dependent on external energy supplies.
IPA and MEK - petrochemicals under direct price pressure
Isopropyl alcohol (IPA) and methyl ethyl ketone (MEK) are petrochemicals made from propylene and butylene - derivatives of petroleum processing. For these products, the causal chain is the shortest and most direct: more expensive oil means more expensive raw material and, consequently, higher prices for the final product.
The blockade of the Strait of Hormuz reduces global oil supply and raises spot market prices. For European IPA and MEK customers, this means increased purchasing costs, longer lead times and the need to revise purchasing budgets. Companies that work with suppliers that have diversified sources of supply can reduce the risk of supply disruptions.
W IMA Poland's offer Both IPA and MEK are important product items. We monitor the situation on an ongoing basis and adapt our pricing policy to changing market conditions.
Fermrol - organic fertiliser to withstand the gas crisis
Fermrol, an organic fertiliser produced by IMA Poland, occupies a unique position in the current market situation. It is the only product in our portfolio that does not depend on natural gas as a raw material. Fermrol is produced as a by-product of alcoholic fermentation, which means that its cost of production does not increase in direct proportion to the price of gas.
Meanwhile, prices for urea - the most popular nitrogen fertiliser produced from natural gas - have increased by around 77% since January 2025. This steep price jump is making organic fertilisers based on fermentation processes more competitive. Farmers and fertiliser distributors are increasingly looking for alternatives to expensive urea, and Fermrol provides a viable solution in this regard.
The increased competitiveness of organic fertilisers is a trend that may continue even after the end of the blockade of the Strait of Hormuz. Growing awareness of the principles of the circular economy (GOZ) and EU regulations supporting sustainable agriculture further strengthen the position of products such as Fermrol.
Lessons from three decades in the distilling industry
IMA Poland has been in the distilling business for more than thirty years. During this time, the company has repeatedly faced raw material crises - from the oil price spike in 2008, to the energy crisis in 2022, to the current blockade of the Strait of Hormuz. This experience leads to one conclusion: commodity crises come in cycles and cannot be avoided.
Resilience to such shocks is built in quiet times. Key elements of the resilience strategy include investment in biogas plants as a source of independent energy, the implementation of closed-loop economy (GOZ) principles in production processes and the consistent diversification of the product portfolio.
A company that bases its operations solely on one raw material or one market is exposed to disproportionate losses in a crisis. Diversification - both raw material and product - is the foundation for operational stability in the long term. You can read more about the company's strategy and history at about IMA Poland.
Impact of the Ormuz blockade on Polish industry - executive summary
The blockade of the Strait of Hormuz affects the Polish chemical and fuel industry in multiple ways. Bioethanol producers can expect higher selling prices, but at the same time have to manage rising raw material and energy costs. Recipients of petrochemicals such as IPA and MEK should prepare for price increases and potential supply delays. The fertiliser sector faces an opportunity to accelerate the transformation towards organic and circular solutions.
A full analysis of the impact of the conflict on IMA Poland's individual product lines, together with comparative tables and pricing scenarios, is available on our company blog.
Need more information?
If you would like to discuss the impact of the current geopolitical situation on your supply chains or find out more about our product offering, Contact the IMA Polska team. Our specialists will help you select the optimum solution tailored to current market conditions. Find out also about the full range of our services and products.