FRANKFURT (dpa-AFX) - Shares of German chemical companies continued to be particularly hard hit on Tuesday amid the Iran conflict. In the DAX, shares of industry giant BASF and agrochemical group Bayer were among the biggest losers, falling by as much as 5 percent.
In the MDAX, this also applied to Wacker Chemie, Lanxess, and Evonik, with losses ranging from 5.6 to 8.4 percent.
Investors reacted with alarm on Tuesday, mainly due to the continued rise in oil and gas prices, as the security of the Strait of Hormuz—crucial for oil and liquefied gas exports—is not guaranteed.
Analyst James Hooper from Bernstein Research fears that rising energy prices will squeeze profit margins in the chemical sector. If the situation persists, he expects consumer sentiment will also be dampened—hindering the broad-based demand recovery that the chemical industry desperately needs in its current crisis.
Strikes by the USA and Israel against Iran have driven European gas prices sharply higher since the weekend. On Tuesday, the benchmark TTF natural gas futures contract reached its highest level in three years due to a continued halt in liquefied gas deliveries from key supplier Qatar. Persistently high prices could weigh on share prices, said analyst Sebastian Bray from Berenberg Bank, referring to BASF. He estimates the gas consumption of the Ludwigshafen-based company at around 30 terawatt-hours per year.
Shares of fertilizer producer K+S and gas group Air Liquide performed relatively solidly within the sector on Tuesday, with losses of less than 1.6 percent.
According to Bernstein analyst Hooper, companies in the gas sector remain among the sector favorites in the current environment due to their more defensive nature.
There are also occasional beneficiaries, usually facing strong competition from Iran. He mentioned, among others, producers of urea and ammonia—substances that play a role in the fertilizer sector./tih/jsl
