Finance
European Chemical Firms, Hit Hard by Iran War, to Report Falling Q1 Earnings
Published by Global Banking & Finance Review®
Posted on April 13, 2026
3 min readLast updated: April 13, 2026
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European chemical firms face falling Q1 earnings due to soaring energy and feedstock costs driven by the Iran–Middle East war, despite repeated price hikes; relief from a two‑week ceasefire offers limited near-term respite.
European Chemical Companies Brace for Lower Q1 Earnings as Energy Prices Soar
Impact of Rising Energy Prices on European Chemical Companies
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.
Energy and Raw Material Costs
"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.
Company Strategies and Market Response
Price Hikes to Protect Margins
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 has hit demand harder in Germany and other European countries, said Research Director Martin Gornig from the German Institute for Economic Research (DIW).
Asian Competitors and Structural Advantages
Asian rivals, meanwhile, retain an advantage thanks to their structurally lower cost bases, which helps 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 had so far 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."
Outlook and Future Relief
Short-Term Ceasefire Effects
NO IMMEDIATE RELIEF FROM TWO-WEEK CEASEFIRE
Although the recently announced two‑week ceasefire deal nL4N40Q05I has eased immediate pressure on energy markets, cost levels remain structurally high and volatility elevated.
"Even if the crisis is temporarily resolved, a rapid normalization of energy prices is unlikely," VCI said.
Potential for Price Reversal
In a prolonged ceasefire scenario, which assumes improving feedstock availability and lower oil prices, some reversal in chemical prices would be plausible, Berenberg analyst Sebastian Bray said.
(Reporting by Anastasiia Kozlova and Amir Orusov in Gdansk, editing by Milla Nissi-Prussak)
Key Takeaways
- •Energy‑intensive chemical sector hit hardest by war‑driven spikes in oil, gas and feedstock prices (apnews.com)
- •Firms like BASF, Brenntag and Evonik are hiking prices multiple times to preserve margins, but analysts warn demand remains fragile (en.wikipedia.org)
- •Two‑week ceasefire eased oil prices briefly, but structural cost pressures and volatility remain high, offering limited immediate relief (apnews.com)
References
Frequently Asked Questions about European chemical firms, hit hard by Iran war, to report falling Q1 earnings
1How have rising energy prices impacted European chemical firms?
Rising energy prices, driven by the Middle East conflict, have significantly increased production costs for European chemical companies, leading to weaker earnings.
2Which companies are raising prices in response to higher costs?
Major firms like Brenntag, Wacker Chemie, Lanxess, BASF, Evonik, EMS Chemie and Sika have all implemented multiple price increases to offset cost inflation.
3How does the ongoing war in the Middle East affect the chemical sector?
The war disrupts fuel and feedstock markets, heightening energy costs for this energy-intensive industry and weakening demand, especially in Europe.
4Will the recent ceasefire quickly normalize energy prices for the sector?
Even with the ceasefire easing immediate pressure, analysts say energy costs remain high and a rapid return to lower prices is unlikely.
5How are Asian rivals impacting European chemical producers?
Asian rivals benefit from structurally lower cost bases, making them more competitive and better able to withstand weak demand than European companies.
