Middle East conflict triggers chain reaction, German chemical industry issues "production reduction" warning.

The German chemical industry recently issued a warning, stating that the shock waves triggered by the conflict in the Middle East are beginning to impact Europe's largest economy. As a result of supply chain disruptions and soaring energy costs, many chemical companies have started to reduce production capacity. The German Chemical Industry Association (VCI) stated at its annual press conference in Frankfurt that as costs continue to rise, the global shipping routes for key raw materials and intermediates are being blocked, further intensifying industry pressures. These series of issues are putting the industrial core of Europe at risk of a new round of industrial slowdown. "The situation is spiraling in the wrong direction, and we only hope that the conflict can end soon," said Wolfgang Groe Entrup, Director General of VCI. He mentioned that the conflict is causing escalating price and supply shocks, and the longer it lasts, the more serious the impact will be. The chemical industry supports the production of many everyday consumer goods, such as automobiles, pharmaceuticals, and agriculture, and is now facing multiple pressures. Since the outbreak of the conflict, the price of natural gas in Europe a key raw material for producing ammonia and nitrogen fertilizers has skyrocketed by over 50%. At the same time, the conflict has also led to restrictions on the supply of intermediate products from Asia, directly threatening the operation of German production lines. Due to tight supply of naphtha (a crude oil derivative used for producing plastics, solvents, and other chemical basics), Asian petrochemical companies have been reducing production, leading to a continuous worsening of the bottleneck effect in the industry chain downstream. The resulting cycle of rising costs and supply shortages is spreading like wildfire to various industries. VCI represents over 1900 companies in the chemical, pharmaceutical, and related fields, including global giants such as BASF, Bayer, and Evonik Industries, as well as hundreds of small and medium-sized family-owned manufacturing companies. The industry employs around 480,000 people in Germany and is one of the country's largest industrial export sectors, serving as a barometer for the overall economic outlook of Europe's largest economy.