Outgoing Dow CEO Jim Fitterling said traffic disruptions in the Strait of Hormuz may take longer to resolve than investors expect. "We have done some scenario analysis before, and the results show that even if the strait is reopened today, just clearing the logistics blockage... it will take 275 days, and now it looks like it may be longer," he said in an interview on Thursday.

After the outbreak of the conflict in Iran, the Strait of Hormuz was effectively closed, causing a major bottleneck in the flow of global energy and petrochemical products. Fitling said the road back to normal will be slow and complex.

"We have to get the empty ships back. We have to clear the straits and the Arabian Gulf. We have to get the empty ships back in," Fitling said. He will step down as Dow CEO on July 1, ending his eight-year tenure. "It's not going to happen in a month or two. It's going to take a few quarters before we see things get back to normal."

The initial shock had a huge impact on the petrochemical market, where Dow is one of the leaders. “When the Strait of Hormuz was closed, 20% of the world’s oil production capacity was affected, but so was about 50% of the world’s ethylene and polyethylene production,” Fitterling said, referring to two key raw materials used to produce plastics used in daily life.

He added that the strait is critical to the petrochemical supply chain, noting that about 40% of naphtha used in production in Asia and Europe passes through it, causing an almost immediate supply squeeze. Naphtha is extracted from crude oil and is an important raw material for the production of plastics and other chemicals.

This imbalance between supply and demand causes prices to skyrocket. "It went up 10 cents a pound in March, another 30 cents a pound in April, and another 20 cents a pound in May," Fitterling said. "We haven't seen a price increase of this magnitude in over a decade."

Dow's latest results were also boosted by rising prices. The company's first-quarter financial report released on April 23 showed solid revenue and lower-than-expected losses. Since the beginning of this year, Dow's stock price has risen by about 65%.

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