Rising tensions in the Middle East and the outbreak of conflict involving the US, Israel, and Iran have injected significant uncertainty into global capital markets, causing notable disruptions to worldwide commodity prices. On March 18, global chemical giant BASF issued a price increase announcement, stating it will raise prices for all products within its Home Care, Industrial & Institutional Cleaning, and Industrial Formulators business portfolios in Europe. The increases could be up to 30%, with select products seeing hikes exceeding that level.
BASF's Home Care and Industrial & Institutional Cleaning (I&I) products encompass surfactants, enzymes, water-soluble polymers, emulsifiers, stabilizers, biocides, optical brighteners, emollients, and custom formulations utilizing various industrial raw materials, all of which are included in this round of price increases. BASF indicated that the new prices are effective immediately or will be implemented according to existing contract terms. The price adjustments are primarily a response to sharp fluctuations in the prices and supply of key raw materials, coupled with multiple pressures from rising domestic and intercontinental logistics costs, and increased packaging and energy expenses.
This move follows a previous announcement on March 4, where BASF cited "significant increases in key raw material costs and freight" as reasons for raising prices globally for its antioxidant, process stabilizer, and light stabilizer product portfolios used in plastic applications by up to 20%.
The latest price hikes coincide with a sector warning from the German Chemical Industry Association (VCI). Last week, the association pointed out that conflict with Iran and potential closure of the Strait of Hormuz could severely impact the chemical industry, sparking market concerns about supply bottlenecks for raw materials such as ammonia, phosphate fertilizers, helium, and sulfur. The association, representing over 2,000 German chemical and pharmaceutical companies and more than 500,000 employees, warned that the longer conflicts persist, the more severe the industry's challenges will become.
Geopolitical tensions are elevating the center of international oil prices. CITIC Securities previously noted in a research report that rising oil prices could make coal chemical one of the key factors for transmitting domestic coal price increases. Particularly as the Middle East is a major source of China's methanol imports, if conflicts disrupt regional logistics, demand for coal-to-methanol in China could increase further, potentially benefiting coal consumption for methanol production more noticeably.
Huatai Securities pointed out that most chemical products in China still maintain a prominent global cost advantage. Furthermore, driven by demand growth factors such as the phase-out of high-energy-consumption facilities in Europe and America and economic growth in Asia, Africa, and Latin America, bulk chemical products are expected to enter an upcycle around 2026. Tight supply supports price increases for some product categories, while prices for other chemicals are falling during the off-season for demand. Driven by factors like tight supply and strong pricing intentions from leading companies, the main products seeing price hikes include Disperse Black, nicotinic acid, and urea. Conversely, products experiencing price declines, influenced by the seasonal demand slump and ample supply, primarily include overseas natural gas, ethane, and butanol/octanol.
Western Securities stated in a report that the current deep restructuring of the global energy landscape, coupled with China's high dependence on imported oil and natural gas, makes securing energy and industrial/supply chain safety crucial. The institution believes modern coal chemical's importance is becoming increasingly prominent. By 2025, oil used for chemical production in China might account for about 24% of total oil use, while coal used for chemicals could be around 8%. Against the backdrop of limited overseas chemical capacity and China's strict control over large-scale refining projects, China's modern coal chemical technology and scale lead globally, potentially enabling high-quality expansion into overseas markets, including Belt and Road Initiative countries. The institution is optimistic that specialized engineering companies in the coal chemical sector could be among the first to benefit from the development of modern coal chemicals.
Related Hong Kong-listed chemical industry chain stocks: SINOPEC CORP (00386): The company's midstream segment has built world-leading refining capacity and intelligent refining bases, with a terminal network covering 30,000 gas stations and over 28,000 Easy Joy convenience stores. Its chemical business is driven by both "basic + high-end" segments, with high-end projects like SBC and POE catalysts commencing production. It strengthens production-marketing coordination through differentiated strategies across four major regions via its chemical sales arm, supporting high-quality midstream development. SINOPEC SSC (01033): The company is a leading domestic integrated oilfield services provider with a full industry chain. Leveraging group resources, it actively expands its overseas market operations. China Petrochemical Corporation (Sinopec Group) collaborates with countries along the "Belt and Road" in areas including oil and gas resource investment, refining and storage investment, petroleum engineering technical services, refining and chemical engineering technical services, and trade of petrochemical products and equipment/materials, forming a long-term, public-benefiting, and sustainable cooperation model. SINOPEC SEG (02386): In 2025, the company secured new domestic contracts worth RMB 63.2 billion, a year-on-year increase of 2%. New overseas contracts amounted to RMB 38 billion, a decrease of 1.3% year-on-year, accounting for 38% of total new contracts. In Q4 2025 alone, the total value of newly signed contracts was RMB 9.901 billion. By sector, the company's 2025 new contracts were primarily in refining and petrochemicals. The value of new contracts for refining, petrochemicals, new coal chemicals, storage/transportation, and other sectors changed by +77%, -3%, -34%, and -22% year-on-year, respectively. SHANGHAI PECHEM (00338): A controlled subsidiary of SINOPEC CORP, the company is one of China's major integrated refining and chemical enterprises and was the first Chinese company to list in Shanghai, Hong Kong, and New York simultaneously. Its main business involves processing crude oil to produce synthetic fibers, resins and plastics, intermediate petrochemicals, and petroleum products.