Iran war drives chemical volatility: Analysts see SRF, Aarti, NFIL, Vinati as key gainers
Chemical prices, from agriculture sector to industrial, have been experiencing volatility lately amid the rising military strikes and geopolitical concerns in West Asia between USA-Israel and Iran.
- Mar 12, 2026,
- Updated Mar 12, 2026 10:19 AM IST
Chemical prices, from agriculture sector to industrial, have been experiencing volatility lately amid the rising military strikes and geopolitical concerns in West Asia between USA-Israel and Iran. The price hikes and tightened supply conditions may add to their margins but elevated energy costs and constrained supply of energy may cap the production and volumes.
The ongoing West Asia war crisis has led to significant volatility in the Indian chemical sector, notes IDBI Capital. Chemical prices have shown major upward swings, with methanol prices rising 35 per cent month on month, resulting in a domino effect for downstream chemicals such as formaldehyde and acetic acid, both registering similar price jumps.
However, BP Equities observes that the continuing war crisis in West Asia is expected to keep prices unstable in the near term, affecting demand visibility while providing some support to producers in segments where supply remains structurally tight.
According to BP Equities Other key bulk chemicals, such as isobutanol and acetic acid, recorded increases of 7.3 per cent and 2.1 per cent respectively, while aniline and phenol prices declined. The refrigerant gas segment continued to benefit from supply constraints imposed by the Montreal Protocol.
Polymers like LDPE have already surpassed their COVID-level highs, while acetone and methanol are also nearing those levels. Rising crude-linked petrochemical prices may also contribute to gradual recovery as global supply dynamics tighten.
IDBI Capital notes that the increase in crude oil prices and energy disruptions are central to these sharp fluctuations. It highlights that reference gases, including R22 and its replacement R32, have experienced sustained price increases over the past year, driven by factors such as Montreal Convention-led production clampdowns.
The brokerage firm adds that companies moving up the value chain, such as those involved in contract development and manufacturing (CDMO) and advanced materials, are positioned to benefit over the longer term. Firms such as SRF, Navin Fluorine, Neogen Chemicals, and Acutaas are cited for their expertise and capacity expansions, which could help them weather ongoing price swings better than pure commodity players.
BP Equities believes that the Indian chemical sector faces a cyclical downcycle due to weak global demand and increased supply, particularly from China. However, policy-driven supply rationalisation in China, including the planned removal of export tax rebates from April 2026, could provide incremental margin support for Indian chemical companies.
"Volatility in chemical prices is bound to continue with the ongoing Middle East Crisis and the consequent energy disruptions. We expect it to subside only after an amicable solution to the war is reached which looks uncertain at this point in time. Companies that are delivering value-added products and moving higher up the value chain in terms of scale and complexity will fare better as compared to pure commodity plays in the long term," said IDBI Capital.
BP Equities maintains that near-term demand visibility remains moderate amid ongoing macroeconomic uncertainties and fluctuating energy markets. The outlook for the sector is cautious, with recovery likely contingent on improvements in industrial demand and the normalisation of energy costs. Indian chemical manufacturers are seen as potential beneficiaries of global supply chain diversification and policy changes abroad.
IDBI Capital has a 'buy' rating on Acutaas Chemicals (Target Price: Rs 2,501), Neogen Chemicals Ltd (Target Price: Rs 2,001), SRF Ltd (Target Price: Rs 3,517) and Navin Fluorine International Ltd (Target Price: Rs 8,265), while has a 'hold' rating on Clean Science & Technology Ltd (Target Price: Rs 857).
BP Equities believes that pure-play specialty chemical and intermediates companies such as Aarti Industries Ltd, Laxmi Organic Industries Ltd, Navin Fluorine, Neogen Chemicals Ltd, SRF, Vinati Organics Ltd and others are well-positioned to benefit from the rising demand for value-added chemical products. However, individual outcomes will depend on execution, product mix, and capex discipline.
Chemical prices, from agriculture sector to industrial, have been experiencing volatility lately amid the rising military strikes and geopolitical concerns in West Asia between USA-Israel and Iran. The price hikes and tightened supply conditions may add to their margins but elevated energy costs and constrained supply of energy may cap the production and volumes.
The ongoing West Asia war crisis has led to significant volatility in the Indian chemical sector, notes IDBI Capital. Chemical prices have shown major upward swings, with methanol prices rising 35 per cent month on month, resulting in a domino effect for downstream chemicals such as formaldehyde and acetic acid, both registering similar price jumps.
However, BP Equities observes that the continuing war crisis in West Asia is expected to keep prices unstable in the near term, affecting demand visibility while providing some support to producers in segments where supply remains structurally tight.
According to BP Equities Other key bulk chemicals, such as isobutanol and acetic acid, recorded increases of 7.3 per cent and 2.1 per cent respectively, while aniline and phenol prices declined. The refrigerant gas segment continued to benefit from supply constraints imposed by the Montreal Protocol.
Polymers like LDPE have already surpassed their COVID-level highs, while acetone and methanol are also nearing those levels. Rising crude-linked petrochemical prices may also contribute to gradual recovery as global supply dynamics tighten.
IDBI Capital notes that the increase in crude oil prices and energy disruptions are central to these sharp fluctuations. It highlights that reference gases, including R22 and its replacement R32, have experienced sustained price increases over the past year, driven by factors such as Montreal Convention-led production clampdowns.
The brokerage firm adds that companies moving up the value chain, such as those involved in contract development and manufacturing (CDMO) and advanced materials, are positioned to benefit over the longer term. Firms such as SRF, Navin Fluorine, Neogen Chemicals, and Acutaas are cited for their expertise and capacity expansions, which could help them weather ongoing price swings better than pure commodity players.
BP Equities believes that the Indian chemical sector faces a cyclical downcycle due to weak global demand and increased supply, particularly from China. However, policy-driven supply rationalisation in China, including the planned removal of export tax rebates from April 2026, could provide incremental margin support for Indian chemical companies.
"Volatility in chemical prices is bound to continue with the ongoing Middle East Crisis and the consequent energy disruptions. We expect it to subside only after an amicable solution to the war is reached which looks uncertain at this point in time. Companies that are delivering value-added products and moving higher up the value chain in terms of scale and complexity will fare better as compared to pure commodity plays in the long term," said IDBI Capital.
BP Equities maintains that near-term demand visibility remains moderate amid ongoing macroeconomic uncertainties and fluctuating energy markets. The outlook for the sector is cautious, with recovery likely contingent on improvements in industrial demand and the normalisation of energy costs. Indian chemical manufacturers are seen as potential beneficiaries of global supply chain diversification and policy changes abroad.
IDBI Capital has a 'buy' rating on Acutaas Chemicals (Target Price: Rs 2,501), Neogen Chemicals Ltd (Target Price: Rs 2,001), SRF Ltd (Target Price: Rs 3,517) and Navin Fluorine International Ltd (Target Price: Rs 8,265), while has a 'hold' rating on Clean Science & Technology Ltd (Target Price: Rs 857).
BP Equities believes that pure-play specialty chemical and intermediates companies such as Aarti Industries Ltd, Laxmi Organic Industries Ltd, Navin Fluorine, Neogen Chemicals Ltd, SRF, Vinati Organics Ltd and others are well-positioned to benefit from the rising demand for value-added chemical products. However, individual outcomes will depend on execution, product mix, and capex discipline.