Chemical and pharmaceutical production in Germany declined at the beginning of the year. In the first quarter, it fell by 2.8 percent compared to the previous quarter; compared to the same period last year, the decline amounted to six percent, as announced by the industry association VCI on Friday. A sustained recovery is not in sight, as high energy, raw material, and transport costs resulting from the war in Iran are weighing on the sector.
According to the association, production in the chemical industry alone rose slightly—by two percent—compared to the previous quarter; the reason, the association states, is a revival in demand driven by “precautionary orders,” as customers feared rising prices as well as interruptions and disruptions to international supply chains due to the war in Iran.
Compared to the same period of the previous year, however, production declined by 4.3 percent. At 75.1 percent, capacity utilization reportedly remained “unprofitable,” and “job cuts continued.”
However, the closure of the Strait of Hormuz also presents advantages for the German chemical industry: according to the association, energy and raw material shortages are forcing the Asian chemical sector to scale back production and implement massive price increases. Consequently, import pressure regarding basic chemicals has recently eased. Companies also experienced diminishing competitive pressure from Asian rivals in several foreign markets. “This temporary phenomenon provides some breathing room for a number of chemical companies,” the association explained.
In the pharmaceutical industry, production fell by 10.1 percent compared to the previous quarter and by 8.7 percent compared to the first quarter of 2025. The association attributed these sharp declines to companies taking advantage of pull-forward effects during the first and fourth quarters of 2025 in anticipation of looming U.S. tariffs. Overall, however, the trend in the pharmaceutical sector remains positive.
AFP translated by Blackout News