Hong Kong stock concept tracking | Middle East war sparks chemical market, BASF announces price increase again, chemicals expected to welcome a prosperous trend (with concept stocks)

The situation in the Middle East continues to escalate, the outbreak of the US-Iran conflict injecting significant uncertainty into global capital markets, causing significant disruption in global commodity prices. On March 18th, global chemical giant BASF announced a price increase, stating that it will raise prices on all products in its portfolio for household care, industrial and institutional cleaning, and industrial formulations in the European region, with increases of up to 30%, and some selected products exceeding that level. Huatai pointed out that most of the global cost advantages of domestic chemical products are still prominent, and with the exit of high-energy consumption facilities in Europe and America, as well as demand-driven economic growth in Asia, Africa, and Latin America, bulk chemical products are expected to enter a prosperous period by 2026. BASF's household care, industrial and institutional cleaning (I&I) products include surfactants, enzymes, water-soluble polymers, emulsifiers, stabilizers, disinfectants, optical brighteners, emollients, and custom formulations using various industrial raw materials are all covered in this round of price increases. BASF mentioned in the announcement that the new prices will take effect immediately or gradually in accordance with existing contract agreements. The main reason for this price increase is to address the severe fluctuations in key raw material prices and supplies, as well as multiple pressures such as rising domestic and transcontinental logistics costs, packaging, and energy costs. As early as March 4th, BASF announced a price increase for its antioxidant, processing stabilizer, and light stabilizer product combinations used in plastics applications globally, citing "significant increases in key raw material costs and freight prices," with the highest increase reaching 20%. The current price increase coincides with the German Chemical Industry Association (VCI) issuing an industry warning. The association pointed out last week that the Iran war and the potential closure of the Hormuz Strait could have a serious impact on the chemical industry, causing concerns about supply bottlenecks for raw materials such as ammonia, phosphorus fertilizers, helium, sulfur, etc. The longer the war lasts, the more severe the industry's difficulties will become. The association represents more than 2,000 chemical and pharmaceutical companies in Germany, covering over 500,000 employees. The geopolitical tensions are pushing up international oil prices, and CITIC SEC's previous research report pointed out that with rising oil prices, coal chemical industry may become an important factor in the transmission of domestic coal prices. Especially since the Middle East region is also a major source of China's methanol imports, if the conflict disrupts regional logistics, the demand for coal-to-methanol in China may further increase, and the benefits of methanol consumption will become more apparent. Huatai pointed out that the global cost advantages of most domestic chemical products are still prominent, and with the demand-driven increase in Europe and America, as well as the economic growth in Asia, Africa, and Latin America, bulk chemical products are expected to enter a prosperous period by 2026. Tight supply supports the price increase of some varieties, while some chemical products may see a price drop in the off-season. Driven by tight supply, strong willingness of leading companies to increase prices, the main products with price increases are black dispersion, nicotinic acid, and urea. In the off-season of demand and abundant supply, the main products with price reductions are overseas natural gas, ethane, octanol, etc. Western released a research report stating that the current global energy landscape is undergoing a deep adjustment, with China's high dependence on foreign oil and gas. Ensuring energy security and supply chain security is crucial, and the importance of modern coal chemical industry is highlighted. By 2025, China's chemical oil accounted for about 24%, and chemical coal accounted for about 8%. With limited overseas chemical capacity and strict control of large refineries in China, China's modern coal chemical technology and scale are globally leading, with the potential to export to countries along the Belt and Road, achieving high-quality overseas expansion. The company is optimistic about specialized engineering companies in coal chemical industry benefiting first from the development of modern coal chemical industry. Related Hong Kong-listed companies in the chemical industry chain: China Petroleum & Chemical Corporation (00386): The company's midstream sector is building a globally leading refined energy and intelligent refining base, with terminal networks covering 30,000 gas stations and over 28,000 easy convenience stores. The chemical business is driven by "basic+high-end" strategies, with high-end projects such as SBC and POE catalysts put into operation, and strengthened production and sales coordination through differentiated strategies in four regions to support high-quality midstream development. SINOPEC SSC (01033): The company is a leading integrated oilfield service enterprise in China. Leveraging group resources, the company actively expands its overseas market business. China Petroleum & Chemical Corporation has cooperated with countries along the Belt and Road in the investment of oil and gas resources, storage and investment in refining, petroleum engineering technical services, refining engineering technical services, and trade in oil and gas chemical products and equipment, forming a cooperative model that benefits in the long run, people, and sustainability. SINOPEC SEG (02386): In 2025, the company's new domestic contracts amounted to 63.2 billion yuan, a year-on-year increase of 2%, while new foreign contracts amounted to 38 billion yuan, a year-on-year decrease of 1.3%, with overseas contracts accounting for 38% of the company's new contracts. In the fourth quarter of 2025, the company's new contract value was 9.901 billion yuan. By industry breakdown, the company's new contracts in 2025 were mainly focused on refining and petrochemicals, with year-on-year changes in new contracts for refining, petrochemicals, new coal chemical industry, transportation and storage, and other industries of +77%, -3%, -34%, and -22%, respectively. SHANGHAI PECHEM (00338): The company is a subsidiary of China Petroleum & Chemical Corporation, a major integrated refinery and petrochemical enterprise in China, and the first company to be listed in Shanghai, Hong Kong, and New York. Its main business includes processing crude oil to produce synthetic fibers, resins and plastics, petrochemical intermediate products, and finished oil products.