German chemical mood sinks as Iran war disrupts supplies

Business morale in Germany's chemical industry fell to its lowest level in almost three years in April, weighed down by global supply chain disruptions linked to the Iran war, a survey showed on Wednesday.

The Ifo institute said its business climate index for the chemical sector fell to minus 29.0 points last month from minus 25.1 points in March.

Supply chain disruptions triggered by the Iran crisis have led to an uptick in incoming orders, the survey showed. However, material shortages are a challenge, with one in three companies affected.

According to the institute, companies expect further price hikes to counter increased chemicals costs. However, they see the rise in demand as temporary and plan to cut back production in the coming months.

Despite the worsening climate reading, assessments of the current business situation improved slightly, with that index rising to minus 27.1 points in April from minus 31.2 in March, the institute said.

Germany's chemicals sector is a pillar of Europe's largest economy and a major supplier to its auto, construction and manufacturing industries, making it highly sensitive to global trade disruptions and energy and raw material costs.

-Reporting by Linda Pasquini, editing by Kirsti Knolle/Reuters