MENA Chemicals: Stick with fertilisers with conflict resolution

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MENA Chemicals: Stick with fertilisers with conflict resolution

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MENA Chemicals

Stick with fertilisers with conflict

resolution

Industry Overview

Supply shock likely behind with potential opening of Strait 16 June 2026

While the potential reopening of the Strait of Hormuz should ease near-term supply Equity

tightness in both petchems and fertilisers, our stock positioning with a preference for MENA

fertilisers is unchanged as it is driven by medium-term fundamentals. We reiterate our Chemicals

Buys on urea-exposed Fertiglobe, SABIC AN and IQCD. We remain cautious on Sashank Lanka >>

commodity petchems (Yansab and Kayan at U/P), where China’s resilience implies Research Analyst

oversupply risks. In the petchems sector, we prefer APPC and Sipchem (Buy) for volume Merrill+971 4Lynch425 8231(DIFC)

growth in the next 12 months. sashank.lanka@bofa.com

Abhishek Kumar >>

Fertiliser stocks likely pricing in a decrease in urea prices ResearchMerrill LynchAnalyst(DIFC)

We believe share prices of urea-exposed names (Fertiglobe, SABIC AN and IQCD) are +971 4 425 8227

abhishek.kumar29@bofa.com

factoring in a long-term urea price of <US$350/t vs BofAe at US$410/t based on a DCF.

Prices will remain higher for longer supported by: 1) elevated gas prices (c.75%

correlation to urea prices) and 2) limited Chinese urea exports, as it prioritises domestic SABIC AN: SABIC Agri-Nutrients

food security/domestic fertiliser supply, and strong Indian import demand. We forecast

urea to average US$500/t in 2026E, averaging US$400/t for the rest of the year vs APPC: Advanced Petrochemicals

US$640/t YTD. We expect US$400/t in 2027E. Every US$100/t change in urea price Company

impacts EPS of Fertiglobe/ SABIC AN and IQCD by 35%/30%/33% respectively.

IQCD: Industries Qatar