Business sentiment plummets in German chemical sector amid Iran war

Sentiment among German chemical businesses deteriorated sharply in March amid the Iran war, according to a survey released by a leading economic think tank on Thursday.

The Munich-based ifo institute's business climate index fell to -25.0 points last month, down from -16.7 points in February, as companies were more pessimistic about their current and future situation following the war in Iran launched on February 28.

"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 was quoted as saying in a statement.

Germany's chemical industry has been struggling with low order levels since before the war, which has exacerbated the situation, on top of soaring prices for oil, gas and resources, which are key for chemical businesses.

"To absorb this cost pressure, companies are planning significantly higher prices," ifo said.

Employment expectations also reached "an all-time low of -32.1 points."

"Companies can scarcely influence the difficult conditions, so the only room for manoeuvrer they have left is to cut jobs," said Wolf.

Chemical businesses have faced headwinds for years, due to rising energy prices in the wake of Russia's war in Ukraine, new US tariffs under Donald Trump and overcapacity in the global market, while the German economy is also struggling to pick up speed.