MUNICH (dpa-AFX) - Business sentiment in the chemical industry has deteriorated sharply following the outbreak of hostilities involving Iran. The sector indicator from the Munich-based Ifo Institute fell to minus 25.0 points in March, down from minus 16.7 points in February. Companies assessed their current business situation as significantly worse, while expectations also darkened considerably. "The consequences of the military actions in the Middle East are hitting the already battered chemical industry with full force," said Ifo industry expert Anna Wolf.
Even before the conflict, the chemical industry was suffering from a lack of orders, a trend that intensified in March. This is now compounded by the sharp rise in costs for crude oil, raw materials, and energy. The chemical sector is a major consumer of oil and gas, while these raw materials also play a central role as feedstocks for products such as plastics, fertilizers, pharmaceuticals, solvents, and cosmetics.
To offset the cost pressure, companies are planning significant price increases, according to the Ifo Institute. At the same time, employment expectations have plummeted to a historic low of minus 32.1 points. "Companies have little influence over these difficult framework conditions; their only remaining room for maneuver is to cut jobs," says Wolf.
The chemical industry has been mired in a slump for years, struggling with high energy costs, US tariffs, global overcapacity, and an economic slowdown affecting key customers such as the automotive industry./als/DP/men
