Iran crisis deepens Europe's raw material shortages and economic strain

The ongoing Iran crisis is set to worsen shortages of key raw materials, particularly in Germany and Europe. Companies like Covestro, a major player in the chemical industry, have already seen price spikes due to limited supply. Now, further disruptions to transport routes could deepen the problem and push costs even higher. Covestro CEO Markus Steilemann has warned that the crisis may trigger a severe shortage of essential materials. He stressed the need to maintain certain value chains in Germany as strategic reserves, ensuring resilience against future shocks. The company is already searching for alternative supply chains for a small number of products to ease potential bottlenecks.

The indirect effects of the crisis are expected to last far longer than the immediate shortages. Inflationary pressures and job cuts could weigh heavily on demand, adding to the financial strain on businesses. Many firms now face tough decisions—whether to consolidate, keep unprofitable operations running, or invest in costly transformations.

Beyond Europe, countries like Japan and South Korea are struggling with their own supply issues. A lack of physical oil and gas has severely limited their ability to produce goods for export. Meanwhile, some material shortages may only emerge later, leaving certain sectors vulnerable to sudden gaps or temporary unavailability. The crisis is likely to hit Germany and Europe the hardest, with prolonged economic strain and supply chain instability. Companies must now navigate rising costs, shifting demand, and the challenge of securing reliable material sources. The full impact of these shortages may take time to unfold, but the pressure to adapt is already growing.