According to research by the ifo Institute, the share of companies reporting shortages of raw materials, intermediate goods and components has surged in Germany from 5.8 percent in January to 13.8 percent in April. This sudden jump amounts to a near-doubling of the indicator within just a few months.
The hardest hit are sectors dependent on petrochemical and energy-intensive products. In the chemical industry, as many as 31.1 percent of firms are reporting problems, while in rubber and plastics manufacturing the figure stands at 22.9 percent. Significant increases have also been recorded in mechanical engineering (14.8 percent), the electrical engineering industry (17.2 percent) and the automotive sector. As Klaus Wohlrabe, head of ifo surveys, emphasizes, "supply chains are under noticeable pressure." Disruptions in global supplies of raw materials and energy are rapidly spreading throughout the entire value chain.
The main cause of the current crisis is the escalation of the conflict in the Middle East, and specifically the restrictions on shipping through the Strait of Hormuz. This key transport artery, through which roughly one-fifth of the world's crude oil output flows, has been largely blocked as a result of the war with Iran. As a consequence, supplies of petrochemical precursors — the base components for plastics, chemicals and many intermediate products — have been seriously disrupted. The German economy's dependence on stable global supplies of energy and chemical raw materials has been laid bare with full force.
The problem, however, is not limited solely to the Middle East. The German television news program Tagesschau draws attention to Germany's structural dependence on China for critical raw materials. A prime example is tungsten, a strategic metal used in cutting tools, electronics, medicine, aviation and the defense industry. The price of tungsten has tripled since 2025, which is seriously hitting companies' financial liquidity. Similar challenges affect lithium, a metal essential for electric vehicle batteries, electronic devices and energy storage systems. The price of this element has risen sharply in recent months. The story of magnesium in 2021, when Chinese export restrictions — officially motivated by environmental protection — caused prices to explode from 2,000–3,000 to over 7,000 dollars per ton, shows how quickly geopolitics can destabilize markets.
These incidents underscore a deeper problem facing the German — and more broadly the European — economy: an excessive concentration of strategic raw-material supplies in the hands of a few geopolitically active players. After the experiences of the COVID-19 pandemic, the war in Ukraine and the energy crisis, all of which exposed the fragility of just-in-time supply chains, an accelerated push toward diversification and reshoring was expected. In practice, however, progress appears too slow in the face of mounting geopolitical tensions.
The consequences for the German economy are profound and multidimensional. First, rising production costs, which will ultimately translate into higher prices for consumers and a loss of competitiveness on global markets. Second, a threat to jobs in key high-tech sectors and advanced manufacturing. Third, the risk of cascading effects — shortages in chemicals and plastics could paralyze entire branches of industry, from automotive to construction. Experts such as Peter Buchholz of the German Mineral Resources Agency (DERA) point to the need to establish strategic raw-material reserves modeled on existing crude oil reserves. Examples from the United States, Japan and South Korea show that the state and industry must work together to build security buffers for critical materials. At the same time, investment in recycling is crucial — Germany has potential in recovering tungsten from scrap, but China is actively buying it up around the world — as well as the development of domestic sources, such as lithium mining projects in the Upper Palatinate region, and the strengthening of partnerships with allied countries under the banner of "friend-shoring."
