Germany’s chemical industry anticipates manufacturing, such as pharmaceuticals, to fall 1.5% in 2026, its primary lobby group VCI stated on Thursday, warning that weak European demand and a wider shift in increase and investment towards Asia are undermining hopes of a sustained recovery.
The association forecast another year of declining result as weak sales volumes, growing prices and subdued funding persist to weigh on the sector, a main pillar of Germany’s production economy.
Manufacturing in Germany’s chemical and pharmaceutical industry fell 3% in the first half of 2026, while sales declined 1% to 106 billion euros ($123.4 billion), VCI stated. Manufacturer costs rose 2%.
“The half-year outcomes are disappointing,” VCI President Markus Steilemann stated in a declaration.
Adding to the industry’s demanding situations, European demand for chemical products is at best stagnant and in a some cases declining, Steilemann stated in a press conference.
For years, European chemical manufacturers advantages from exports to rapidly-growing Asian markets. But as customers expanded in China and some place else in Asia, companies increasingly moved manufacturing toward those markets, lowering exports from Europe. As a end result, increasing local manufacturing in Asia has increasingly displaced imports from German and other European manufacturers, Steilemann stated.
The group had declined to publish industry forecasts in March and May because of uncertainty surrounding the war in the Middle East, but stated any latest development in conditions was unlikely to mark the begin of a wider turnaround.
VCI stated disruptions related to the war had temporarily advantages some European chemical manufacturers by hurting more feedstock-dependent Asian competitors. Moreover, it stated the impact was insufficient to offset wider weakness in demand and investment.
The outlook contrasts with developing optimism at some individual companies. Evonik Industries (EVKn.DE), and Brenntag (BNRGn.DE), have both currently raised their full-year profit forecasts.
Germany’s chemical and pharmaceutical industry is the country’s third-largest industrial sector and is broadly seen as a bellwether for production demand, supplying materials to industries starting from autos and construction to agriculture and textiles.
