Soaring prices for natural gas and the possible cessation of shipments rooted in ongoing animosity between Europe and Russia have sparked a plunge in sentiment among managers in Germany’s chemical industry.

The country’s ifo Institute (Munich; www.ifo.de) said its July poll of corporate leaders in the sector showed business expectations for the next six months plummeting to -44.4 points, the lowest reading since November 2008 and a major decline from the 11.8 mark reported at the same time last year.

“Natural gas accounts for 44% of energy consumption in the chemical industry,” sector analyst Anna Wolf explained. “It also plays an important role in product manufacturing: around 30% of all chemical products require the use of natural gas.”

Related: July inflation nears 9% in euro area, sets third straight record

Ifo said around half of German gas imports come from Russia, which has been throttling supplies to Europe, leaving political leaders concerned that the situation could continue or even worsen (see Plasteurope.com of 20.07.2022). Gas prices have surged on weaker supply.

The thinktank reported that over half of companies in Germany’s chemical sector have also complained about material shortages that are expected to continue into the first half of next year. Moreover, the cost of incoming shipments of chemical precursors has also risen sharply. “In May 2022, import prices for other inorganic basic chemicals were already more than 65% higher than in the same month last year,” Wolf noted. “For fertilisers and nitrogen compounds, they increased by a whopping 170%.”