Europe’s Chemical Makers Benefit as Iran Conflict Impacts Asian Competition
Impact of Middle East Conflict on European Chemical Industry
By Patricia Weiss
FRANKFURT, May 12 (Reuters) - Europe's embattled chemicals industry is getting an unexpected lift from the Iran war, as supply disruptions raise costs for Asian rivals and customers prioritise reliability over price.
Temporary Market Advantages for Europe
"The conflict in the Middle East is, in our view, leading to temporarily more favourable market conditions for the European chemical industry," Lanxess CEO Matthias Zachert said, citing reduced competitive pressure from Asia.
For years, European producers have struggled with high energy costs, weak demand and intense price competition from Asian peers. As recently as March, Germany's VCI industry body warned of severe bottlenecks from disrupted shipping routes and said the sector was in "absolute crisis mode".
Executives now say those same disruptions are, for now, shifting the balance.
Supply Chain Resilience
Evonik's interim CFO Claus Rettig said the change is rooted in supply chains. European firms tend to produce closer to end markets and rely more on local raw materials, while many Asian competitors depend on Middle East feedstocks.
"Our production and our customer deliveries are secured," Rettig said.
He cautioned the improvement may reflect customers bringing orders forward rather than a lasting recovery.
Signs of Recovery and Caution
Recent Demand Trends
NO EUPHORIA
Evonik has seen a recent pickup in demand. CEO Christian Kullmann called April "pretty sexy," pointing to stronger sales volumes, but said this did not signal a sustained rebound.
At Lanxess, Zachert said volumes have been rising since March, driven by a gradual recovery and easing price pressure from Asia, rather than panic buying or stockpiling.
Belgian chemicals group Solvay is seeing a similar trend. CFO Alexandre Blum said competitive pressure from China has eased in some segments, with no clear sign of advance purchasing.
Regional Production Models
CEO Philippe Kehren said Solvay's regional setup was working to its advantage. "Our model of producing regionally and using local raw materials is proving extremely resilient," he said.
Industry Warnings and Volatility
Still, the industry urged caution.
"A few good numbers" do not amount to a broader recovery, VCI head Wolfgang Grosse Entrup told Reuters.
Germany's BASF also flagged fragility, with gains in some segments offset by higher energy, raw material and logistics costs.
"The current situation is too volatile to make more far-reaching statements," a spokesperson said.
Outlook for European Chemical Makers
For now, executives see the improvement as temporary, rather than a structural turnaround, and that Asian competition could strengthen again quickly if supply chains stabilise.
"There is no reason to be swept up by euphoria," Zachert said.
(Reporting by Patricia Weiss. Writing by Friederike Heine. Editing by Mark Potter)
