Finance
Germany's chemicals lobby sees serious disruptions from war in the middle east
Published by Global Banking & Finance Review®
Posted on March 13, 2026
2 min readLast updated: March 13, 2026
Quick Summary
Germany’s chemicals lobby VCI warns that the war in the Middle East—especially closure of the Strait of Hormuz—could spark prolonged disruptions, triggering inflationary pressures amid an already fragile chemicals sector battered by falling production, revenues, and capacity utilization.
Germany’s Chemicals Industry Braces for More Disruptions Amid Middle East Crisis
Impact of Middle East Crisis on Germany’s Chemicals Sector
Persistent Disruptions and Market Uncertainty
March 13 (Reuters) - German chemicals lobby VCI said on Friday it expects potential persistent disruptions from the closure of the Hormuz strait to cause inflationary pressure and unsettle markets, piling onto the difficulties the sector has experienced for years.
The association, which represents around 2,300 companies, did not provide an outlook for the industry in 2026, due to the U.S.-Israeli war on Iran, it added.
Challenges Facing the Chemicals Industry
Mounting Pressure from Costs and Tariffs
Germany's chemicals sector, the country's third-largest industry employing around half a million people, faces mounting pressure from high production costs, bureaucratic burdens and a stagnating economy, compounded by U.S. tariffs on imported goods.
Weak Industrial Activity and Price Competition
"Overall, the industry is suffering from weak industrial activity, high import pressure and intense price competition," VCI summarized in a statement.
Recent Performance and Outlook
Production and Revenue Trends
In the fourth quarter of 2025, the industry recorded a small rise in production of 1.9%, largely due to the pharmaceutical branch, while chemicals firms saw their production fall by 2.9% compared to the fourth quarter of 2024.
Revenue, however, fell by 2.8% compared to the fourth quarter of 2024, to 51.8 billion euros ($59.6 billion), led by a 3.0% drop in domestic sales.
Industry Leaders’ Statements
"The annual results for the chemical industry are abysmal – production, sales and prices are all in the red," VCI Managing Director Wolfgang Große Entrup said.
"2026 will not be any easier," he added.
Exchange Rate Information
($1 = 0.8697 euros)
Reporting Credits
(Reporting by Tristan Veyet in Gdansk; Editing by Joe Bavier)
Key Takeaways
- •Strait of Hormuz shutdown due to U.S.–Israeli war on Iran may intensify oil and materials supply disruptions, raising costs and unsettling markets via VCI’s warning (en.wikipedia.org)
- •Germany’s chemicals industry continues to contract: 2025 saw production declines (excluding pharma) of ~2.5–5 %, lowest capacity utilization since 1991 (~72 %), stagnant or falling sales, and no recovery expected before 2026 (icis.com)
- •Structural challenges persist—high energy and production costs, regulatory burdens, weak demand, strong euro, U.S. tariffs and growing competition from China maintain pressure on Germany’s chemicals sector (icis.com)
References
Frequently Asked Questions about Germany's chemicals lobby sees serious disruptions from war in the Middle East
1How is the Middle East conflict affecting Germany's chemicals industry?
The closure of the Hormuz strait due to the U.S.-Israeli war on Iran could cause persistent disruptions, inflationary pressure, and unsettle financial markets.
2What challenges is Germany's chemicals sector facing?
The sector faces high production costs, bureaucratic burdens, a stagnating economy, U.S. tariffs, and weak industrial activity.
3How did the German chemicals sector perform in late 2025?
In Q4 2025, production rose by 1.9% mainly due to pharmaceuticals, but overall revenue dropped by 2.8% compared to Q4 2024.
4What is the outlook for the German chemicals industry in 2026?
The VCI lobby did not provide a 2026 outlook, citing uncertainties from the ongoing conflict and warning that further challenges are expected.
5How significant is the German chemicals sector to the country's economy?
It is Germany's third-largest industry, employing around half a million people.
