German Chemicals Industry Faces Stagnation Amid High Costs

The German chemicals industry is expected to face stagnation in 2025 due to high producer prices and low order backlogs. Revenues decreased by 2% in 2024, with sales down 4% in Germany. High production costs and weak demand continue to weigh heavily on the sector.

Industry lobby group VCI anticipates a challenging year ahead for Germany's chemicals industry, with orders and sales projected to stagnate in 2025 owing to elevated producer prices and minimal order backlogs. The association, representing around 1,900 companies, reported a 2% decline in chemical-pharmaceutical industry revenues in 2024, declining to 221 billion euros ($231.34 billion), as prices dropped and domestic sales decreased by 4%.

The sector, burdened by high production costs and weakened demand throughout 2023, showed potential recovery signs in early 2024. However, that optimism has dimmed due to persistent high expenses and workforce shortages. 'It's a gloomy assessment. The only silver lining is the halt of the rapid downturn experienced over the past two years,' noted VCI President Markus Steilemann, also Covestro's CEO.

In 2024, order scarcity meant production facilities were underutilized, prompting permanent closures, with more shutdowns expected. High production costs and growing bureaucracy are placing Germany behind other nations, leading some companies to slash domestic budgets and boost foreign investments, VCI reported. ($1 = 0.9553 euros)

(With inputs from agencies.)