Supply bottlenecks grow for German industry amid Iran war

The share of German companies facing supply chain disruptions more than doubled to 13.8% in April, up from 5.8% recorded in January, the Munich-based ifo Institute reported on Thursday.

The institute attributed shortages in pre-production materials to the Iran war, following a survey of German businesses. "Supply chains are coming under considerable pressure," said Klaus Wohlrabe, head of ifo surveys.

"The conflict in the Middle East and the restrictions on shipping through the Strait of Hormuz are increasingly impacting the supply of intermediate products," he added.

The shortages are becoming particularly acute in sectors heavily dependent on oil-based and energy-intensive inputs, Wohlrabe noted. He pointed to the chemicals sector, where 31.1% of the companies surveyed reported material shortages.

Manufacturers of rubber and synthetic goods saw a rise to 22.9% of companies affected, with knock-on effects in mechanical and electrical engineering and in the automotive sector.

"Current developments show just how heavily the industry depends on global raw material and energy supplies," Wohlrabe said.

The Strait of Hormuz - a vital route for around a fifth of global oil supply - has been largely closed to shipping for weeks due to the Iran conflict.

Disruptions can quickly ripple through entire value chains, particularly in the case of petrochemical inputs, the Ifo Institute said.