The blockade of the strait between Iran and Oman affects products such as fertilizers, as large quantities of ammonia, phosphorus, urea, and sulfur are produced in the Gulf region. "Urea prices have already risen significantly in recent weeks as a result—and this at a time when it is planting season in the Northern Hemisphere," Commerzbank noted in a market commentary. The transport of helium, used in chip production and the aerospace industry, has also halted. The consequences of a failure in helium supplies would be dramatic, warned Consorsbank analyst Jochen Stanzl. "Chip production would have to be scaled back, and prices would rise." This could impact the expansion of AI data centers.
The longer the war in the Middle East lasts, the more critical the disruptions to global trade will become, said VCI chief Große Entrup. "The first products are no longer flowing, and what does flow is at extremely volatile prices." Companies are taking countermeasures where possible, such as through stockpiling, cutting production capacities, or cost reductions. Evonik CEO Christian Kullmann warned that chemical production will gradually migrate abroad. "This process is already underway and will be accelerated by the war," he told "Der Spiegel."
NO FORECAST DUE TO MIDDLE EAST WAR
The crisis hits the German chemical industry at a difficult time. Last year, production fell by 3.3 percent, while revenue declined by 3.8 percent. Capacity utilization in the fourth quarter was only 72.5 percent, well below the profitability threshold. The order situation remains weak. The industry blames uncompetitive production costs in Germany, as well as overcapacity in China pushing down prices and U.S. tariffs. "The crisis is no longer an event; it is the operating mode," Große Entrup said, describing the situation. He did not venture a forecast for the current year, stating that the uncertainty caused by the Middle East war, which is sending oil prices on a rollercoaster ride, is simply too great. In December, the VCI had predicted a one percent decline in production for the chemical industry in 2026.
The IGBCE trade union also warned of a potential collapse in the basic chemicals industry. "There is a risk of losing entire industrial clusters with a tendency toward monopolization, or at the very least, a chaotic deindustrialization," said IGBCE Chairman Michael Vassiliadis. He called for a politically moderated process for the consolidation of basic chemicals: "We appeal to the Chancellor to champion this in Europe and simultaneously push it forward at home." He noted that models for such a coordinated approach already exist in Japan and South Korea.
Employers are currently in the midst of a new round of collective bargaining for the 585,000 employees in the chemical and pharmaceutical industry with the IGBCE. The union is demanding increased purchasing power and job security.
(Report by Sabine Wollrab, edited by Myria Mildenberger. For inquiries, please contact our editorial office at berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)
