Germany’s chemical industry is showing signs of renewed optimism, but a sustained recovery remains out of reach, if industry data is to be analysed.

 

Chemical companies rated their current business situation predominantly positively in September -- for the second month in a row. Expectations also improved, turning positive for the first time in more than a year, as companies anticipate a recovery in exports and a somewhat stronger outlook for the months ahead.

 

The shift mirrors a broader improvement in Germany’s economic outlook. Leading economic research institutes have recently raised their growth forecasts for the country. But the recovery remains heavily dependent on government spending, particularly investment in infrastructure and defense, while private investment and industrial demand are only showing tentative signs of stabilization from low levels.

 

Fresh industry data underline the fragility of the rebound. Order intake from both domestic and international markets fell again over the summer, with around 40 percent of chemical companies identifying weak orders as a serious obstacle to business.

 

Production and sales have also recently lost momentum. Temporary boosts linked to the Iran war—including stockpiling, precautionary orders and production disruptions among Asian competitors—have faded.

 

Meanwhile, the industry continues to grapple with structural pressures. High costs, heavy bureaucracy and extensive regulation are weighing on investment and industrial demand. German chemical companies are also struggling to capitalize fully on stronger international demand because of their cost disadvantages at home.

 

VCI Managing Director Wolfgang Große Entrup comments: “Just because the mood isn’t completely at rock bottom anymore doesn’t mean the chemical industry is celebrating. We don’t see a sustainable upswing. The recent recovery remains fragile. Confidence alone isn’t enough to revive production and investment. Policymakers must finally address the obstacles to growth – high costs and paralyzing bureaucracy.”

 

The message from the industry is clear: sentiment may be improving, but stronger confidence has yet to translate into a durable turnaround in orders, production and investment.