German chemical industry stands to profit from the war in Iran

Sentiment in the crisis-hit German chemicals industry has brightened sharply, according to a leading German economic research institute.

For the first time in four years, chemicals firms once again assessed their current business situation positively in August, which is drawing to a close, the Munich-based ifo Institute reported on Friday.

The indicator has risen from minus 14.6 points in July to plus 11.6 points. This is reportedly due to disruptions to Asian supplies caused by the war in Iran.

The business climate indicator for the sector - which is composed of the current business situation and expectations for the coming months - rose from minus 26.3 to minus 2.4 points.

Ifo researcher Anna Wolf spoke of an "exceptional economic situation" in which the war in Iran and the blockade of the Strait of Hormuz have severely disrupted the supply of natural gas and other chemical raw materials to Asia.

In addition, China has imposed export restrictions on sulphuric acid, a chemical required for the production of fertilizers and numerous other products.

Added to these factors, the Houthi rebels in Yemen - who are allied with Iran - continue to threaten access to the Suez Canal, meaning many ships from Asia are taking the long detour around the southern tip of Africa, with correspondingly higher costs and longer delivery times.

As there is no end to the war in sight, German chemical companies expect the boom to continue, according to the ifo Institute.

However, this does not mean that the fundamental structural problems in Germany have been resolved, and the survey found further job cuts in the industry are expected.