Across Europe, industry leaders are becoming more aware of the challenges surrounding the availability of essential raw materials. Despite this, a recent analysis by Inverto highlights a significant difference between how risks are perceived and the actual purchasing strategies being followed.
Geopolitical Risk vs. Supply Stability
Nine in ten businesses see a high level of risk from geopolitical issues in their raw material supply chains. However, only a small number—eight percent—are choosing to source materials with supply stability as the top priority. For the majority, low cost is the main deciding factor, influencing 66 percent of purchase decisions.
This emphasis on cost efficiency has led to a troubling outcome. China has established itself as a dominant force in many critical raw materials and intermediate products. Now, the country is leveraging its control for geopolitical influence. Recent export restrictions on substances like magnets, rare earth elements, and defense-related materials have already led to production cuts for some companies.
Survey participants are projecting further increases in material costs over the next twelve months. According to the researchers, this level of concern is the highest since 2020, suggesting a growing realization that traditional cost-saving models may no longer be viable.
These rising costs are already challenging the bottom lines of manufacturing businesses. Many are now seriously questioning whether certain product lines will remain economically feasible in the long term. Justus Brinkmann, an Inverto principal and co-author of the study, points out that corporate decision-making has not shifted much. “The same old priorities are still being used,” he notes.
Energy-related uncertainty is also shaping the landscape. Almost all respondents believe energy price fluctuations will increase their purchase costs. More than half expect a major impact. The main factors include the conflict in the Middle East and the ongoing restrictions at the Strait of Hormuz, a key passage for global energy trade.
Energy and Regional Disruptions
The Hormuz strait carries about 20 percent of the world’s sea-borne oil, gas, and refined products. The current disruptions have caused shortages of essential materials like fertilizer and aluminum. Although European companies have less direct exposure to these trade flows, global price increases are still hitting their operations.
Sebastian Wellmann, a risk management expert at Inverto, explains the ripple effects using the solar industry as a case. Many European manufacturers purchase aluminum components from Turkey. But Turkish producers rely on shipments from the Gulf. With transport routes blocked, they are forced to source more costly alternatives. These additional expenses are then passed on to European clients, raising aluminum component prices by 10 to 20 percent.
Adapting Supply Chain Strategies
Wellmann emphasizes that the crisis has revealed vulnerabilities in current supply chain strategies. It is now clear that companies need to expand their supplier base and build more robust inventory systems. However, simply adding more suppliers doesn’t guarantee a more secure supply chain.
The Inverto survey was conducted among 354 senior executives and supply chain managers in Europe and the Asia-Pacific region between May and July 2026. A large portion of the participants operate in process industries, mechanical engineering, and the automotive sector. Among the most critical raw materials identified by the companies surveyed were oils and fats, paper, wood and cellulose products, agricultural raw materials, iron and steel, and fertilizers. These were cited by 25 to 27 percent of respondents as vital to their operations. Rare earths and lithium followed with 14 and 11 percent, respectively.