The war in Iran has caused the prices of several raw materials to rise. In a context where the fluidity of international trade is no longer obvious, it becomes essential to identify the dependencies of businesses and exposed sectors.
In the short term, both sides have tried to end the conflict. But a lasting ceasefire is struggling to emerge. Negotiations are still stuck on 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 less obvious.
Not to mention oil, or a potential fuel shortage in the coming weeks, several specialized raw materials deserve attention. The most concerning for the stock markets is likely helium. This gas is closely linked to the semiconductor industry and the markets do not need sources of concern in this sector that largely supports market growth.
While the sale of helium mainly relies on long-term contracts, disruptions affecting Qatari gas installations and the Strait of Hormuz are starting to be felt. Qatar represents about a third of a critical yet narrow market. The U.S. remains the largest global producer, but some Asian economies are highly dependent on Qatari gas. South Korea, for example, imports about two-thirds of its helium from Qatar.
Helium is essential at various stages of chip manufacturing, especially for its cooling properties as it efficiently conducts and transfers heat. The issue goes beyond semiconductors to the entire electronics chain, highlighting the lack of credible substitutes and long-term storage challenges.
Major gas suppliers like Air Liquide, Linde, or Air Products currently have some pricing power that will positively impact margins as the conflict persists. However, they also face short-term operational constraints in diversifying their supplies.
About South Korean companies SK Hynix and Samsung Electronics, which supply about two-thirds of global memory chips, they reportedly have enough stocks to last until June, but they are still paying premiums to secure their stocks. In Taiwan, the Ministry of Economy reassured about reserve conditions, but some companies told Reuters that production was being impacted.
While the risk is not immediate, two points to monitor are the impact on margins and, especially, the possibility of production reduction if tensions prolong.
The current trend emphasizes a focus on the semiconductor industry, which underpins the entire electronic universe, but helium is also useful in other industries.
( Source: Reuters )
Moving on to another topic, pistachios are also involved. The trend of chocolate tablets filled with pistachios, such as the “Dubai” brand, has gained popularity on social media. This trend has supported the margins of some brands, like Lindt, with a tablet selling at 9.99 euros for 150 grams, which is 66.67 euros per kilo. Pistachios are in vogue beyond chocolate, with Starbucks’ pistachio coffee and pistachio ice cream from Hӓagen-Dazs also doing well.
According to Bloomberg, the price of pistachios reached 4.57 dollars per pound in March, an eight-year high. Iran accounts for about a fifth of global production and a third of exports. The U.S. remains the top producer, but lower-than-expected harvests last year have reduced availability.
The price hike is driven by both increased demand due to consumption trends and weakened supply due to geopolitical and agricultural tensions.
Another raw material under pressure is sulfur. It plays a significant role in fertilizer production, as well as in some copper and nickel production chains.
The Middle East represents about a quarter of global sulfur production. The price of sulfur is rising to historic highs as countries, including China, limit sulfuric acid exports to protect their agricultural sector. This price surge is impacting industries that rely on sulfur for various purposes.
For nickel, the impact is primarily cost-related. Indonesia, a major nickel producer, imports about 75% of its sulfur from the Middle East for its HPAL plants, which are crucial for producing high-quality nickel for electric vehicle manufacturers. Some nickel producers have already reduced production rates due to the sulfur price increase.
As for copper, the risk lies in cost increases and volume reductions. Sulfuric acid is essential for the solvent extraction process, which accounts for about a fifth of global copper production.
Iran is also a significant exporter of chemicals, including methanol, with nearly a quarter of global production. Overall, industries are exposed to petroleum and gas derivatives like urea, used in fertilizers, and naphtha, crucial for plastic production.
Asia, especially China, is the most affected region. According to La Tribune, Beijing imports 1.2 million barrels of Iranian oil, 800,000 barrels of liquefied petroleum gas, and similar volumes of naphtha every day, along with around 740,000 barrels of methanol per month.
While oil is the main channel for transmitting the shock, it is important to consider other critical dependencies such as helium, pistachios, sulfur, methanol, urea, and naphtha. The war in Iran serves as a reminder that critical dependencies are often more discreet than imagined.
