German chemical lobby expects production to fall again in 2026

The main German chemical lobby group VCI warned on Thursday that the industry's expectations are for a 1.5% drop in production by 2026.

The association predicts another year of falling output due to weak sales, rising costs, and low investment. This sector is a major pillar in Germany's manufacturing industry.

VCI reported that the chemical and pharmaceutical industry in Germany saw a 3% drop in production in 2026's first half, while sales fell by 1% to 123.4 billion euros. Prices for producers rose by 2%.

Markus Steilemann, VCI's President, said that the results of the first half year were "disappointing".

The group had declined to publish industry predictions in March and may due to the uncertainty surrounding the conflict. However, any improvement in conditions is unlikely to be the beginning of a larger 'turnaround.

VCI stated that disruptions caused by the conflict had temporarily helped some European chemical manufacturers, while hurting Asian competitors who depended more on feedstock. It said that the impact was not enough to offset a broader decline in investment and demand.

The outlook is a contrast to the growing optimism of some individual?companies. Evonik Industries, Brenntag and both have recently raised their profit estimates for the full year.

The chemical and pharmaceutical sector in Germany is the third largest?industrial industry and is widely regarded as a bellwether for manufacturing demand. It supplies materials to industries from agriculture to textiles, and even autos.

(source: Reuters)