Many European chemical firms, including BASF and Evonik Industries, are enjoying a surge in profits due to war in the Middle East, but the outlook could change if a current spike in demand disappears and economic turmoil catches up with companies, industry analysts say.

The war is benefiting European chemical producers in several ways. Competition from firms in Asia and the Middle East has lessened because some facilities are damaged, chemicals being produced can’t be shipped through the Strait of Hormuz to Europe, and chemical raw materials aren’t getting through the Strait to Asia. In addition, demand from European chemical purchasers is spiking as they stockpile materials in anticipation of shortages.

Restarting and repairing chemical and fossil-fuel plants in war-affected countries will take years, says Paul Hodges, chairman of New Normal Consulting. Even getting the 2,000-plus ships stranded east of the Strait of Hormuz to European and other destinations—once the waterway is reopened—is going to take time, he says.

How long this advantage will last is unclear, but it won’t disappear quickly. “Many companies came into the crisis with low inventories, as they assumed oil and product prices would continue to fall due to oversupply. Now they are having to restock in a hurry,” Hodges says. “The spike that some European chemical companies are enjoying, that’s from their customers going, ‘Oh, right, let’s buy now. Let’s get as much as we can in,’“ Hodges says.

Analysts at the investment bank Jefferies see a “tailwind for almost all” European diversified chemical companies, according to a note to investors. After weak performance in January and February, positive earnings for European chemical companies are more likely for the second quarter (Q), they state. “Reduced competitive pressure is emerging as a key theme should Asian exports remain constrained.”

Jefferies gives the example of BASF, which it estimates has gone from a monthly profit of approximately $450 million prior to the war to more than $700 million in April. The bank estimates that Evonik Industries’ monthly total profit will have doubled to roughly $230 million during the same time frame.

But once European chemical makers’ customers have completed stockpiling, the outlook could change for the worse. “Phase two is at some time in the future when these higher prices result in demand destruction by end consumers, who simply can’t afford to pay the new prices,” Hodges says.

Some European firms may already be worse off. “It’s asset specific and depends on the availability of certain raw materials and the flexibility of an asset to use alternative raw materials,” says a veteran consultant who asked for anonymity because his company doesn’t permit public comment on the war. “Companies that took something away from the COVID-19 crisis are probably in a better position. If a company still has niche—or linear—supply chains, then they could have a massive impact there.”

The many possible scenarios are making it difficult for European chemical companies to work out what to do next. A survey by the Ifo Institute, a German economic research organization, concludes that chemical companies in Germany are finding it increasingly difficult to assess their future business development. “Uncertainty is particularly high in energy-intensive industries: In the chemical industry, it stands at around 95%, and among manufacturers of rubber and plastic goods, at 93.9%,” Ifo says in a recent press release. This uncertainty could have knock-on effects. “The longer the uncertainty lasts, the more investments and growth will come under pressure,” Ifo states.

The impacts of the war are so wide ranging that even on the company level, it can have both positive and negative impacts. As an oil and gas producer in the US and Europe, the chemical maker Ineos stands to benefit from the hike in energy prices. It also has long-term contracts in place to purchase low-cost ethane from the US and ship it to supply its European ethylene crackers.

But the war could delay construction of Ineos’s Project One cracker in Antwerp, Belgium, because major components are being built in the United Arab Emirates (UAE) and could be stuck east of the Strait of Hormuz. “Shipments began arriving in Q3, 2024 and continued throughout 2025, with the final two deliveries from the UAE scheduled for Q2, 2026,” the company states in its 2025 annual report (PDF).

Alex Scott is a C&EN business reporter covering all chemistry-related issues in Europe.

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