German chemicals lobby lifts 2026 sales forecast, but warns recovery remains elusive

German Chemicals Lobby Ups 2026 Sales Forecast Amid Lingering Recovery Doubts

VCI Raises Forecasts but Warns of Ongoing Industry Challenges

By Anastasiia Kozlova

Nov 12 (Reuters) - German chemicals lobby VCI raised its 2026 sales forecast for the industry on Thursday, supported by higher prices, but warned the temporary boost from supply disruptions tied to the Iran war had faded.

Impact of Middle East Crisis on European Chemical Makers

The Middle East crisis provided an unexpected boon for European chemical makers, as supply chain disruptions weighed more heavily on their Asian rivals, and passing on higher energy costs to customers boosted prices of some chemicals.

VCI's Perspective on Temporary Gains

"We anticipated that these windfall gains stemming from specific geopolitical circumstances would eventually come to an end, and that is precisely what has happened," VCI Managing Director Wolfgang Grosse Entrup told journalists.

Updated Industry Forecasts

The industry association, which represents around 2,000 chemical and pharmaceutical companies, most of them small to mid-sized, now expects sector turnover to grow 3.5% this year, up from its September forecast of 2.5%.

Drivers of Growth

However, that increase will be driven entirely by higher producer prices rather than stronger production volumes, it said.

Outlook for Recovery

"The economic situation of the German chemical and pharmaceutical industry is, at best, stabilising at a low level. A sustainable recovery is not in sight," VCI said in the quarterly statement.

Long-Term Challenges

The outlook for 2027 also remains bleak due to persistent political and structural challenges, Grosse Entrup added in the press call.

Germany 'Firmly in the Red'

Grosse Entrup cautioned against reading stronger earnings from large chemical companies as evidence of a domestic recovery.

Profit Generation Outside Germany

"These companies are generating their profits elsewhere, outside of Germany. For many of them, Germany remains firmly in the red," he said.

Industry Response and Policy Recommendations

Behind the headline numbers, companies are delaying investment, cutting capacity and shedding jobs, Grosse Entrup said. He urged Berlin to use the narrow reform window before state elections next spring to tackle energy costs, bureaucracy and competitiveness.

(Reporting by Anastasiia Kozlova in Gdansk and Patricia Weiss in Frankfurt, editing by Milla Nissi-Prussak)