Published by Global Banking & Finance Review®
Posted on September 3, 2025
2 min readLast updated: January 22, 2026
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Germany's chemical industry faces a 30-year low in capacity due to U.S. tariffs and declining sales, impacting exports and production levels.
(Reuters) -Germany's chemical industry association on Wednesday said its capacity utilization hit its lowest level in more than 30 years in the second quarter as sales and prices declined on uncertainties around U.S. tariffs.
In the April-June period, Germany's chemical industry was running at only 72% of its full production capacity, the lowest level since 1991, and well below the level required to break even, VCI said.
The VCI association said pull-forward effects in business with the United States waned throughout the April-June period, as exports had been brought forward in anticipation of tariffs on goods from Europe.
European chemical manufacturers are grappling with renewed challenges as U.S. tariffs disrupt global trade, leading customers to postpone purchases and weakening demand in a sector still recovering from the 2022 energy crisis.
Overall production in Germany's chemicals sector including pharmaceuticals fell 3.8% quarter-on-quarter, contrasting with the January-March quarterly increase of 6.7%.
"Weak demand, declining sales, and production far below pre-crisis levels - this is the current reality in our industry and also in large parts of German industry," VCI managing director Wolfgang Grosse Entrup said in a statement.
The sector, the third-largest industry in Europe's economic powerhouse Germany, can be seen as a bellwether for the broader economy as it produces materials used in sectors ranging from automotive and construction to agriculture and textiles.
Pharmaceutical output fell by 5.6% compared with the previous quarter.
On an annual comparison, overall quarterly production was down 3.1%, or 5.1% when pharmaceuticals were excluded, and revenue fell by 2.7% compared with the same period last year.
The industry maintained its 2025 guidance for production volumes including pharmaceuticals to fall by 2% and industrial sales by 1%.
(Reporting by Bartosz Dabrowski and Cian Muenster in Gdansk)
Germany's chemical industry is currently running at only 72% of its full production capacity, the lowest level since 1991.
Weak demand, declining sales, and production far below pre-crisis levels are significant challenges faced by the industry.
Pharmaceutical output fell by 5.6% compared to the previous quarter.
The industry maintains its guidance for production volumes, expecting a decline of 2% and a 1% drop in industrial sales by 2025.
As the third-largest industry in Germany, the chemical sector serves as a bellwether for the broader economy, producing materials used across various sectors.
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