German chemical industry mood rises for second straight month in September, Ifo says

German Chemical Industry Sentiment Picks Up for Second Month, Ifo Reports

Overview of the German Chemical Industry's Recent Performance

By Anastasiia Kozlova and Amir Orusov

Business Climate Index and Market Sentiment

Oct 2 (Reuters) - The business climate in Germany's chemical industry improved for a second consecutive month in September, as demand support from Middle East supply disruptions bolstered the struggling sector, the Ifo Institute said on Friday.

The business climate index for the sector entered positive territory for the first time this year, rising to 5.5 points, up from a seasonally adjusted minus 2.6 points in August.

Business expectations brightened noticeably to plus 2.3 points from minus 15.0 in August, the Munich-based economic research institute said.

Customer Behavior and Market Drivers

"Customers in Germany and abroad are continuing to build up their inventories and are willing to pay higher prices to do so," said Ifo industry expert Anna Wolf.

Some European producers have benefited as supply disruptions increased costs for Asian competitors and prompted customers to prioritise reliability over price.

Temporary Nature of the Boost

"Though the boost seems to last longer than initially expected, it remains temporary, as it rests on supply disruptions," Wolf told Reuters, adding that the recovery remains fragile because structural disadvantages at German production sites persist and job cuts continue.

Performance of German Chemical Stocks

German chemical stocks have outperformed the broader European chemicals index, which has risen about 13% this year, as a string of earnings upgrades lifted sentiment. Among individual stocks, Evonik has led gains on BASF takeover speculation, while Lanxess has lagged after warning of no broad-based recovery in its core markets.

Main Beneficiaries Among Sub-Sectors

Impact on Basic and Specialty Chemicals

WHAT SUB-SECTORS ARE MAIN BENEFICIARIES

Basic chemicals, particularly petrochemicals, have benefited most directly from supply disruptions in Asia and the Gulf region, which have lifted prices and spurred restocking, Wolf said.

Besides, companies exposed to defence and infrastructure are beginning to benefit from rising public investment, with the volume effect expected to become more visible over the next months, she said.

The more durable support comes from specialty chemicals, where the global AI boom and expanding semiconductor production are driving demand for high-purity process chemicals, Wolf added.

(Reporting by Anastasiia Kozlova and Amir Orusov; Editing by Devika Syamnath)