German Chemical Industry Output Slumps to Lowest Utilization Rate Since 1991

Germany’s chemical industry endured another tough quarter in Q2 2025, with production, sales, and prices all declining, according to the German Chemical Industry Association (VCI), which described the overall performance as “disappointing.”

Output and Capacity Collapse

Production of chemical products (excluding pharmaceuticals) fell 5.1% year-on-year and 2.7% quarter-on-quarter, while combined chemical and pharmaceutical production declined 3.1% YoY and 3.8% QoQ. Capacity utilization plunged to 71.7%—the lowest level since 1991— far below the profitability threshold. 

Producer prices dropped 0.2% year-on-year and 0.6% quarter-on-quarter, reflecting weak demand and excess capacity. Meanwhile, chemical and pharmaceutical industry sales fell 2.7% YoY to €52.2 billion, and declined 5.2% from the previous quarter.

Demand Weakness Persists

“The domestic recovery we had hoped for has not materialized, and the order backlog has worsened,” VCI stated. Many industrial customers have cut back on production and suspended chemical purchases. International business also showed signs of contraction.

Wolfgang Große Entrup, VCI’s Managing Director, called the second quarter “yet another endurance test for the chemical industry.” He added: “Weak demand, falling sales, and production levels far below pre-crisis norms—this is the reality for our sector and for much of German industry. Companies are facing enormous uncertainty, which is preventing normal business activity.”

Outlook: No Recovery in Sight 

Despite the poor quarterly performance, VCI has kept its 2025 forecast unchanged. The association expects total chemical and pharmaceutical production to decline, with pure chemical output falling around 2%. With prices under pressure, total industry sales are projected to shrink 1% to €221 billion this year.

 VCI emphasized that neither the domestic nor international market shows signs of recovery, leaving the sector bracing for further turbulence.

Bottom line: Germany’s chemical industry is stuck in a prolonged slump, with utilization at its lowest in more than three decades. Unless demand revives, Europe’s industrial powerhouse risks further erosion of competitiveness in one of its cornerstone sectors.