Middle East Tensions Intensify: 76.4% of Companies Report Impact, Petrochemical Shortages and Price Hikes Spread, Affecting Wage Increases

Purpose of the Survey / Aim of the Report The tightening of the Middle East situation is impacting corporate activities through rising crude oil and material prices, as well as supply anxieties related to petroleum products. While the government has indicated that there are no major disruptions to the supply of crude oil and naphtha, companies on the ground, particularly SMEs, are facing not only price hikes but also material shortages, delivery delays, and even procurement stoppages, leading to widespread impacts on their business operations. Therefore, this survey was conducted to grasp the actual impact of the escalating Middle East situation on corporate activities. This report is an excerpt of relevant questions from the results of the "57th Regular Business Survey" to organize the realities and challenges faced by companies. Full Report Here For information on business sentiment and wage increase trends, click here (includes content not in this article). Summary ✅Seminar on Middle East Situation Trends and Corporate Countermeasures In response to this situation, the Nagoya Chamber of Commerce and Industry (Meisho) will hold an online seminar to organize the latest trends and their business impacts, and to convey the direction of necessary responses and support information for companies. Details Here Outline of the 57th Regular Business Survey (April-June 2026 Quarter) Survey Period: May 12 (Tue) - May 29 (Fri) Survey Method: Internet Survey Responding Companies: 1,446 Main Survey Findings (1) Reality of the Impact Over 70% responded "Impacted"; impact is notable in transportation, manufacturing, and construction industries. 76.4% of all respondents answered "Impacted," with 32.2% experiencing significant impact. By industry, 96.5% of transportation companies, 88.3% of manufacturing companies, and 87.5% of construction companies reported being "Impacted." Conversely, the impact on B2C companies (service industries) was limited. *Transportation and retail industries have limited sample sizes. Material shortages are worsening, with over 90% of companies experiencing soaring procurement prices. Regarding procurement and supply impacts, "decrease in available quantity" was cited by 65.5%, and "delivery delays" by 52.1%, both exceeding half of respondents. "Procurement stoppages" also occurred in 29.7% of companies, indicating a worsening material shortage. 92.7% of companies reported price impacts (increase in procurement prices). *Analysis Target: Companies that responded that they were "significantly" or "partially" impacted by the tightening of the Middle East situation. Petrochemical-derived raw materials, components, and products are the biggest bottleneck. Petrochemical-derived raw materials, components, and products were identified as the items with the greatest impact on both procurement/supply and pricing. 81.2% cited "petrochemical-derived raw materials, components, and products" for procurement/supply impacts, and 72.0% reported that these items had increased in price by over 20%. Let's look at the specific situations by industry, focusing on transportation, manufacturing, and construction, where the impact of the Middle East situation was particularly pronounced. [Transportation Industry] Procurement and price hikes of energy (crude oil, fuel, etc.) are a heavy burden. Unlike the overall results, "difficulty in procuring energy (crude oil, fuel, etc.)" and "price hikes" became the biggest challenges. *The sample size for the transportation industry is limited. [Manufacturing Industry] Concerns about the future are rising due to the widening impact. Items cited as having procurement/supply impacts include "solvents," "paints," and "oils/lubricants." In terms of pricing, 82.6% of companies reported that "petrochemical-derived raw materials, components, and products" had increased in price by over 20%. *Analysis by User Local Text Mining Tool (https://textmining.userlocal.jp/) [Construction Industry] Soaring material costs and procurement difficulties are impacting sales. Items cited as having procurement/supply impacts include "paints" and "solvents." In terms of pricing, 83.0% of companies reported that "petrochemical-derived raw materials, components, and products" had increased in price by over 20%. *Analysis by User Local Text Mining Tool (https://textmining.userlocal.jp/) (2) Response Status and Limitations "Price pass-through" is the most common measure, but its effectiveness is limited. While 31.7% of companies are taking measures, only 7.1% feel the effects. Among the measures taken, 68.9% cited "implementing price pass-through." *Analysis Target: Companies that responded that they were "significantly" or "partially" impacted by the tightening of the Middle East situation. Approximately 60% of companies cannot sufficiently pass on price increases. However, 59.2% of companies reported that the proportion of cost increases they could pass on was "less than 50%," indicating an inability to sufficiently pass on costs. Companies that responded "less than 50%" mentioned difficulties in even negotiating prices and the challenge of passing on the full extent of cost increases even when considering price revisions from September onwards. *Analysis Target: Companies that responded that they were "significantly" or "partially" impacted by the tightening of the Middle East situation. The tightening of the Middle East situation is a strong brake on the "wage increase trend." 59.2% of companies stated they "have implemented or plan to implement wage increases." In the previous survey (Jan-Mar quarter), 71.0% of companies anticipated wage increases, a decrease of 11.8 percentage points. Demand for financial support and accurate information is increasing. The cash flow DI has worsened by 8.1 points this quarter and is expected to worsen next quarter. Financial consultations are increasing across a wide range of industries, particularly in construction and transportation, with some financial institutions reporting double the number of consultations in May compared to the previous month. Companies are also requesting information on the need for working capital and future outlooks. (3) Discussion Supply-side problems are worsening. This survey revealed that supply-side issues such as material shortages, delivery delays, and procurement stoppages are occurring across a wide range of sectors. In the transportation industry, price hikes and procurement difficulties for fuels and materials are significant. In manufacturing and construction, shortages of petrochemical products like solvents, paints, and lubricants are becoming severe. Since petrochemical-derived products are used in a wide range of processes, shortages of some materials can lead to stagnation in overall production or construction. Furthermore, in situations where supply is limited, materials tend to concentrate among companies with strong procurement capabilities, making it harder for SMEs to secure necessary materials. Price pass-through alone has limitations. While price pass-through was the most common corporate response, approximately 60% of companies have not been able to achieve sufficient pass-through. Delays in price pass-through and worsening cash flow are squeezing corporate profits and impacting the momentum for wage increases. Meisho will convey these realities to the Chubu Bureau of Economy, Trade and Industry, Aichi Prefecture, and Nagoya City, and advocate for the realization of necessary support measures. ✅Seminar on Middle East Situation Trends and Corporate Countermeasures In response to this situation, Meisho will hold an online seminar to organize the latest trends and their business impacts, and to convey the direction of necessary responses and support information for companies. Details Here Date & Time: June 26 (Fri) 14:00 - 15:30 Participation Fee: Free Application: https://answer.cci.na