German Chemical Industry Faces Supply Chain Crisis Amid Iran War Disruptions
Impact of Iran War on Germany's Chemical Sector
Business Morale Hits Three-Year Low
May 6 (Reuters) - Business morale in Germany's chemical industry fell to its lowest level in almost three years in April, weighed down by global supply chain disruptions linked to the Iran war, a survey showed on Wednesday.
Decline in Business Climate Index
The Ifo institute said its business climate index for the chemical sector fell to minus 29.0 points last month from minus 25.1 points in March.
Supply Chain Disruptions and Incoming Orders
Supply chain disruptions triggered by the Iran crisis have led to an uptick in incoming orders, the survey showed. However, material shortages are a challenge, with one in three companies affected.
Price Hikes and Production Plans
According to the institute, companies expect further price hikes to counter increased chemicals costs. However, they see the rise in demand as temporary and plan to cut back production in the coming months.
Current Business Situation and Sector Importance
Improvement in Current Assessments
Despite the worsening climate reading, assessments of the current business situation improved slightly, with that index rising to minus 27.1 points in April from minus 31.2 in March, the institute said.
Role of the Chemical Sector in Germany's Economy
Supplier to Key Industries
Germany's chemicals sector is a pillar of Europe's largest economy and a major supplier to its auto, construction and manufacturing industries, making it highly sensitive to global trade disruptions and energy and raw material costs.
(Reporting by Linda Pasquini, editing by Kirsti Knolle)
