German Chemical Industry Faces Severe Decline in 2024 with No Recovery in Sight

The German Chemical Industry Association (VCI) has announced alarming news regarding the state of the chemical and pharmaceutical sectors in Germany. The year 2024 has ended on a bleak note, with hopes for an industrial recovery in Germany and Europe proving to be unfounded. Instead of a rebound, numerous industries have continued to experience declines.

According to VCI's recent statement, demand for German-made chemicals remains weak, particularly in the local European market. The only glimmer of hope comes from countries outside of Europe, but this is not strong enough to shift the overall negative trend.

The production of chemicals in Germany has seen a drastic fall. Data released by VCI indicates that in the fourth quarter of 2024, production in the chemical and pharmaceutical sectors decreased by 4.2% year-on-year and 1.2% from the previous quarter. Specifically, the chemical output dropped 0.6% year-over-year and 6.3% quarter-over-quarter, with capacity utilization plummeting to 74.7%, remaining below the profitability threshold.

In terms of sales, the chemical and pharmaceutical industries reported a 1.5% decline compared to the fourth quarter of 2023, although there was a slight 0.3% increase sequentially, bringing total sales to 53.1 billion euros. Prices for chemical and pharmaceutical products have stagnated, showing a year-on-year decrease of 0.2%.

VCI is placing its hopes on the new federal government of Germany, anticipating that bold reforms will restore the country's competitiveness. However, VCI General Director Wolfgang Groß, has warned that unpredictable tariff policies, rising energy prices, and unresolved structural issues will continue to introduce uncertainty for the chemical industry. He emphasizes that a comprehensive shift in economic policy is critical, urging that "economic priority" must become the guiding principle.

Currently, the workforce in the chemical and pharmaceutical sectors remains stable at around 480,000 employees, buoyed by growth in pharmaceuticals. However, the chemical sector faces significant pressure, and employment numbers have begun to slightly decline.

Looking ahead, VCI predicts that production in Germany's chemical and pharmaceutical industries will stagnate in the 2025 fiscal year, with industry sales expected to drop by 1%. A recovery in the industry’s economic outlook may not materialize until 2026.