Iran crisis deepens raw material shortages, threatening Europe's chemical industry
The ongoing Iran crisis is threatening to worsen shortages of key raw materials, particularly in the chemical industry. Covestro CEO Markus Steilemann has warned that Germany and Europe will bear the brunt of the disruption, with long-lasting economic effects expected. Transport routes for raw materials out of Iran remain open for now, but any disruption could deepen supply problems. Countries like Japan and South Korea already face severe constraints in producing exportable goods due to limited oil and gas supplies. If shortages escalate, certain materials may become temporarily unavailable in specific regions.
Covestro is searching for alternative supply chains for a small but critical range of products. Without these materials, production could face major setbacks. Meanwhile, prices for some chemical raw materials have spiked, benefiting companies like Covestro in the short term. Steilemann has called for Germany to maintain certain value chains as strategic reserves, even if they are not economically viable. He argues this would improve resilience against future crises. However, companies are under pressure to act—whether through consolidation, keeping unprofitable operations running, or costly transformations. The indirect effects of the crisis, including inflation and job losses, are expected to linger far longer. Demand could suffer as a result, adding to the economic strain.
The Iran crisis risks creating a more severe shortage of essential raw materials, with Europe and Germany facing the toughest challenges. Businesses must now balance immediate cost pressures with long-term strategies to secure critical supplies.
