By Anastasiia Kozlova and Amir Orusov April 13 (Reuters) - European chemical companies are expected to report weaker first-quarter results, shedding light on how deep the impact from the war in the
European chemical firms, hit hard by Iran war, to report falling Q1 earnings
Impact of Middle East Conflict on European Chemical Industry
By Anastasiia Kozlova and Amir Orusov
April 13 (Reuters) - European chemical companies are expected to report weaker first-quarter results, shedding light on how deep the impact from the war in the Middle East has been on an industry largely seen as one of the most exposed to it.
The U.S.-Israeli war with Iran has disrupted nL6N4080SZ fuel and feedstock markets, driving up prices for the energy‑intensive chemical industry.
Rising Costs and Industry Vulnerability
"Compared with other industries, the chemical sector is particularly affected by the dramatic increase in energy and raw material costs, as it predominantly relies on oil and gas as feedstocks," German chemicals association VCI said.
A war-driven surge in energy prices worsened already weak conditions seen at the start of 2026 in a sector that has struggled for years with subdued demand, high energy costs, supply-chain disruptions and a sluggish broader economy.
Companies’ Response: Price Hikes
COMPANIES HIKE PRICES TO SHIELD MARGINS
To offset higher costs, chemical companies including Brenntag nS8N3TY04W, Wacker Chemie nL8N4010TU, Lanxess nS8N3TY04Z, BASF nL8N4060NX, Evonik, EMS Chemie nL6N40Q090 and Sika nL8N40C0SF have raised their prices, in some cases multiple times across different products.
The finance chief of Germany's BASF said during a JPMorgan chemicals conference in March that he expected pricing to more than offset cost inflation in the second quarter of the year, according to a note from the brokerage. Brenntag's CFO meanwhile said that price increases had so far been accepted by customers.
Regional Differences and Competitive Pressures
While rising energy costs are a global issue, higher energy bills combined with an already delayed economic recovery have hit demand harder in Germany and other European countries, said Research Director Martin Gornig from the German Institute for Economic Research (DIW).
Asian rivals, meanwhile, retain an advantage thanks to their structurally lower cost bases that help them cushion the effects of weak demand, mwb Research said in a recent note.
"Higher prices further weaken the competitive position of European producers versus Chinese suppliers," said industry specialist Anna Wolf from Germany's Ifo Institute for Economic Research.
VCI said feedback from companies so far had been mixed, as concerns over supply shortages were driving demand in some segments, while others saw dampened purchasing activity due to higher prices.
Analysts warned that any gains may prove fragile and they do not expect pricing alone to drive a meaningful earnings recovery in the near term.
Wolf said volatile prices and rising uncertainty risked weakening demand further. "The recent price increases have been, given the generally weak demand and sluggish business confidence, unexpectedly sharp."
Geopolitical Uncertainty and Energy Shock
Failed US-Iran Talks and Ceasefire Risks
FAILED US-IRAN TALKS THREATEN CEASEFIRE, PROLONG ENERGY SHOCK
Weekend peace talks between the U.S. and Iran failed to deliver a deal to end the war, putting a fragile two‑week ceasefire nL4N40Q05I at risk.
The absence of an agreement means Iran's blockade of the Strait of Hormuz is likely to persist, driving further increases in oil and gas prices and hitting the chemical industry twice over, Wolf told Reuters.
"The underlying structural crisis runs far deeper than the geopolitical shock alone," she said.
Long-Term Industry Challenges
Even if the Strait of Hormuz were to open, the situation would only improve from "very bad" to "bad", Wolf said, as issues around high energy costs, inadequate energy transition infrastructure and heavy bureaucratic burdens remain unresolved.
JPMorgan analysts said in a note on Monday that even if the ceasefire holds, the degree of damage to crude oil, petroleum products and petrochemical production facilities in the Gulf could cause fluctuations in trading terms and volumes.
(Reporting by Anastasiia Kozlova and Amir Orusov in Gdansk, editing by Milla Nissi-Prussak)
