Media: Germany’s chemical industry faces shockwaves from Middle East war

Business confidence in Germany's chemical industry dropped sharply in March as the war in the Middle East weighed on the market outlook and increased the risk of job cuts, according to ‌the Ifo survey.

The Ifo institute's index for the ​sector dropped to -25.0 points from a seasonally adjusted -16.7 points in February, while ​business expectations turned more pessimistic, sliding to -17.9 points from -12.1 points, Reuters reports.

"The consequences ⁠of the military hostilities in the Middle East are hitting the already ​struggling chemical industry with full force," Ifo industry expert Anna Wolf noted. A sharp rise in energy prices, amid the sector's reliance on oil and natural gas as raw materials and energy sources, is increasing pressure on German manufacturing.

Disruptions to oil and petrochemical flows through the Strait of Hormuz have narrowed global chemical supplies, exposing the industry's vulnerability to energy shocks and driving plastics and polymer prices to roughly four‑year highs.

"Companies can ​scarcely influence the difficult ​conditions, so the ⁠only room for manoeuvre they have left is to cut jobs," Wolf said, adding that employment expectations also dropped ​to an all-time low of -32.1 points in March.

Seasonally adjusted unemployment in Germany remained unchanged in March, yet the absolute number of unemployed has exceeded 3 million for the third consecutive month, maintaining pressure on the labour market.

By Jeyhun Aghazada