The war in Iran has pushed up the prices of several raw materials. In a context where international trade is no longer so smooth, it becomes essential to identify the dependencies of businesses and exposed sectors.
In the short term, both sides have sought to end the conflict. However, a lasting truce has struggled to emerge. Negotiations continue to stumble over heavy topics such as uranium enrichment, the Strait of Hormuz, and the easing of sanctions.
In case of a stalemate, it is necessary to look beyond oil. The tensions will fuel inflation but will also weigh on the margins of some companies, sometimes in sectors where the connection with the Middle East is not obvious.
Apart from oil, several more specialized raw materials deserve attention amidst the ongoing conflict. One of the most concerning for stock markets is helium, closely tied to the semiconductor industry. Price disruptions are already being felt due to Qatar’s gas installations and the Strait of Hormuz. Helium is crucial for chip manufacturing, especially for its cooling properties.
Major gas suppliers like Air Liquide, Linde, and Air Products currently hold significant pricing power, impacting margins as the conflict lingers on. It is crucial to monitor the impact on margins and the potential reduction in production if tensions prolong.
The current trend highlights a focus on the semiconductor industry, with helium being essential in various electronic applications. Another raw material under strain is sulfur, crucial for fertilizers and certain copper and nickel production chains.
Iran’s importance in the global sulfur production adds pressure due to geopolitical tensions and agricultural restrictions. The ongoing conflict in the region has led to price hikes and supply disruptions, affecting industries using sulfur for various purposes.
With nickel, Indonesia, a major producer, faces challenges due to sulfur supply disruptions from the Middle East, affecting nickel battery production for electric vehicles. For copper, sulfuric acid is vital in the solvent extraction process, representing a significant portion of global copper production.
Furthermore, Iran’s role as a major exporter of chemicals like methanol presents risks for industries reliant on oil and gas derivatives like urea and naphtha, crucial in fertilizer and plastic production. Asia, particularly China, bears the brunt of these dependencies, with significant imports of Iranian oil, gas, and related products.
While oil remains the primary channel of impact, the war in Iran highlights the critical dependencies on lesser-known raw materials like helium, pistachios, sulfur, methanol, urea, and naphtha. These critical dependencies are often more discreet than imagined.
