UAE Petrochemical Hub Restarts: Borouge Restores Ruwais Output After April Attack

Borouge Plc has restored full production availability at its Ruwais complex in the United Arab Emirates after asset damage caused by the regional conflict on 5 April 2026, but the site is still running well below normal rates. The company confirmed on 31 July 2026 that repairs were completed by the end of June, ahead of its own schedule, and that it now plans a return to high utilization during the second half of the year. That recovery depends on two things the company does not control: feedstock supply and shipping conditions in the Gulf.

The damage happened on 5 April 2026, when falling debris from an intercepted aerial attack hit production units in the Ruwais Industrial Area. Borouge told the Abu Dhabi Securities Exchange on 6 April that air defences had intercepted the incoming threat, that the resulting fires were brought under control and that no one was injured. Production in the affected areas was suspended while damage was assessed. The strikes were part of the wider conflict between Iran and the United States and Israel that began on 28 February 2026 and closed the Strait of Hormuz to most commercial traffic.

The cost of that shutdown is visible in the numbers. Borouge produced 721,000 tonnes in the second quarter, roughly 24 percent less than in the same quarter of 2025, a period that had itself been reduced by a major planned turnaround. Utilization averaged 60 percent across the complex, split between 48 percent for polyethylene and 71 percent for polypropylene. Sales volumes reached 873,000 tonnes, above production, because the company drew down 98,000 tonnes of inventory built in the first quarter and pulled in 54,000 tonnes from other sources inside the group.

The logistics response is the part of the story that matters most for buyers. Borouge activated contingency plans in March 2026 and built export routes by road, rail and sea that avoid the Strait of Hormuz entirely. Management confirmed at the end of July that all volumes are now shipped without using the waterway, moving cargo through the country's east coast. Asia-Pacific took 49 percent of second quarter sales and the Middle East and Africa took 41 percent, up two points on the previous quarter as land freight expanded. The workaround came at a price, with selling and distribution costs rising to 254 dollars per tonne.

Higher prices covered much of the damage. Revenue rose 20 percent quarter on quarter to 1.4 billion dollars and net profit rose 23 percent to 191 million dollars, helped by a 53 percent jump in average realised prices and by about 25 million dollars of insurance proceeds. Adjusted EBITDA of 401 million dollars was 9 percent lower than a year earlier, with the margin at 29 percent, five points below the 2025 level, because of higher propylene feedstock costs and freight. Net debt reached 3.3 billion dollars at the end of June, up from 2.7 billion at the end of 2025. Repair costs are expected to keep 2026 maintenance spending below 300 million dollars.

As of early August 2026 the complex is running between 60 and 70 percent utilization, the level reported through July, with daily swings above that range. Feedstock availability, not export capacity, is the binding constraint. The Strait of Hormuz remains effectively closed to normal commercial traffic after a June memorandum between Washington and Tehran broke down in July, so the propylene and other feed supplies the plants depend on stay tight.

Prices are expected to ease from here. Borouge told investors that third quarter polyolefin prices should moderate from the very strong second quarter level while staying above historical averages, as operating rates recover across Asia and regional supply constraints ease. Benchmark prices already softened in July, and propylene feedstock costs have come down from their peak although they remain above pre-conflict levels. The record prices were described as temporary and are expected to normalize over time.

The wider polyolefin market explains why these prices were so high. Borouge estimates that around 29 million tonnes of polyethylene and polypropylene capacity in its core Asia-Pacific markets, close to 19 percent of the regional total, was affected by Middle East feedstock shortages during the quarter. Many plants ran below normal rates for much of the period. That shortage lifted global prices to record or near record levels in April and May before balances started to normalize in June.

For buyers, the practical question in the second half is whether Ruwais volumes return before prices fall further. Borouge has set out two scenarios. If the Strait of Hormuz reopens in a durable way, polyolefin prices should normalize while utilization rises and feedstock and freight costs fall. If restrictions continue, prices stay elevated but the complex may not be able to lift output much beyond current levels. The first units of the Borouge 4 expansion are also arriving, with a second cross-linked polyethylene plant now in commercial production and adding 100,000 tonnes a year, and further units due to start during the rest of 2026 and in 2027.