SYNOPSIS: Middle East tensions and the closure of the Strait of Hormuz have raised concerns over supply chains and input costs. Stocks like Atul, Aarti Industries, and others remain exposed to disruptions.
The Iran-Israel-US conflict has now entered its 10th day, and the Strait of Hormuz – one of the world’s most important trade routes – has remained shut for six consecutive days. The disruption has already started rippling through global markets. Oil prices have surged more than $110 per barrel and touched an intraday high of $119.5, international trade flows have been affected, and equity markets across the world have turned volatile.
As geopolitical tensions in the Middle East continue to intensify, sectors that depend heavily on energy prices, global trade routes, and Middle East supply chains are coming under the spotlight. In India, chemical stocks were among the key laggards on Monday, as investor sentiment turned cautious amid concerns over rising input costs and potential supply chain disruptions. Here’s a closer look at some chemical stocks that could feel the impact of the ongoing Iran-Israel-US conflict:
With a market cap of Rs. 18,436 crores, the stock is currently trading in the red at Rs. 6,261.9 on BSE, down by over 2 percent on Monday. Atul Limited, one of the largest integrated chemical companies in India and a part of the Lalbhai Group, operates in two reporting segments: Life Science Chemicals and Performance, with other chemicals under 9 businesses.
According to analysts at IIFL, Atul has a wide raw material basket with notable exposure to the Middle East. Any disruption in trade routes or supply chains from the region could impact input availability and logistics costs. Freight expenses could also rise, particularly for exports to Europe and the United States. Additionally, given the company’s broad product portfolio, fluctuations in crude oil prices may also have a widespread impact across its product categories.
With a market cap of Rs. 14,781 crores, the stock is currently trading in the red at Rs. 407.65 on BSE, down by around 3 percent on Monday. Aarti Industries Limited, one of the world’s leading speciality chemical companies, is engaged in the business of manufacturing and dealing in Speciality Chemicals and intermediates. It ranks globally in 1st – 4th position for 75 percent of its portfolio.
While its raw material, benzene, is locally-sourced, procuring aniline would be difficult, as per IIFL. Its exports to the Middle East account for 23 percent while to Europe are 4 percent. Crude derivatives such as benzene are raw materials.
While one of its key raw materials, benzene, is sourced domestically, IIFL analysts note that aniline procurement could become more challenging if supply chains are disrupted. The company also has meaningful exposure to the Middle East, with around 23 percent of its revenue coming from the region as of FY25, while exports to Europe account for about 4 percent.
Aarti serves customers across 8 countries in the Middle East, and the company has been actively expanding its global customer base in the United States, Europe, and the Middle East to diversify its markets and manage regional demand fluctuations. However, the current geopolitical situation could temporarily affect trade flows and logistics costs.
Benzene is a key industrial chemical widely used as a solvent and as a base raw material in the production of plastics such as nylon and polystyrene, resins, synthetic fibres, detergents, and rubber. Aniline, on the other hand, is mainly used in the manufacture of methylene diphenyl diisocyanate (MDI), which is essential for producing polyurethane foams. It is also used in rubber processing chemicals, dyes and pigments like indigo, as well as pharmaceutical products including paracetamol.
Deepak Nitrite Limited
With a market cap of Rs. 20,367 crores, the stock is currently trading in the red at Rs. 1,493.3 on BSE, down by around 1 percent on Monday. Deepak Nitrite Limited, one of India’s leading manufacturers of advanced intermediates and phenolic chemicals, is engaged in the business of producing a wide range of products, including Sodium Nitrite, Phenol, Acetone, IPA, Xylidines, Oximes, Toluidines, Cumedines, and more. Its product offerings find applications in pharmaceuticals, agrochemicals, dyes and pigments, paints, laminates, plywood, and other critical sectors.
According to IIFL, the ongoing geopolitical tensions could affect the supply of certain raw materials used by the company, particularly propylene derivatives and ammonia, due to potential disruptions in global trade routes. While the company has limited export exposure, some of its key inputs, such as propylene and benzene derivatives, are linked to crude oil prices, which could introduce cost volatility.
In FY25, Deepak Nitrite announced expanding its global footprint through new manufacturing facilities, establishing operations through Deepak Oman Industries (SFZ) LLC in the Salalah Free Zone, Oman, alongside another upcoming facility in Gujarat.
Once operational, the Oman facility, which will produce sodium nitrite and sodium nitrate, was expected to strengthen the company’s access to international markets, particularly in the Middle East, supporting its broader strategy of expanding its presence in global specialty chemical markets. However, the current geopolitical tensions could make near-term execution and market access more challenging.
With a market cap of Rs. 59,105 crores, the stock closed in the red at Rs. 2,003.6 on BSE, down by around 1 percent on Monday. Coromandel International Limited is engaged in the business of manufacturing and trading of farm inputs comprising fertiliser, crop protection, specialty nutrients and organic compost. In addition to its key business segments, the company is proactively exploring adjacent areas such as CDMO, specialty chemicals, and next-generation chemistries, including fluorination and battery materials.
According to IIFL, the company relies heavily on phosphoric acid and sulphur as key raw materials. Iran is among the top three global suppliers of sulphur, and a significant portion of both sulphur and phosphoric acid shipments typically passes through the Strait of Hormuz.
With the strategic waterway currently disrupted, supply chains for these inputs could face challenges. Since both materials are also linked to crude-based intermediates, any prolonged disruption in shipping routes could potentially influence input costs and supply availability for the company.
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