Germany's crisis-hit chemical industry seeks revival

Germany’s chemical sector is a major economic pillar, ranking third after automotive and mechanical engineering, generating hundreds of billions in annual revenue and employing about half a million people. The sector has been hit by crisis conditions driven by high energy costs, increasing regulatory burdens, a weak economy, and strong foreign competition. Chemical production depends on large energy inputs beyond electricity, including heat, steam, and pressure, so rising energy prices reduce global competitiveness and profitability. After Russia’s full-scale invasion of Ukraine in February 2022, the loss of cheap Russian gas led to some of the highest energy prices globally. The US-Iran conflict further spiked energy prices and disrupted supply chains, causing shortages of key raw materials. Revenue has fallen about 22% since 2022 to 220 billion in 2025, with no turnaround expected and stagnation or further production declines likely.

"Germany's chemical sector stands as a core pillar of the nation's economy, ranking third after automotive and mechanical engineering. It generates hundreds of billions in annual revenue and directly employs about half a million people."

"Chemical production requires large amounts of energy, not just electricity but also heat, steam and pressure. So, when energy prices rise, it erodes firms' global competitiveness and profitability. Since Russia's full-scale invasion of Ukraine in February 2022, and the resulting loss of cheap Russian gas, German chemical companies have faced some of the highest energy prices globally."

""Energy prices, especially natural gas prices, have doubled since the war in Ukraine started," said Christof Gunther, managing director of InfraLeuna, a German infrastructure and services company that operates the Leuna Chemical Park, the nation's largest integrated chemical site. "And they [energy prices] have just doubled again temporarily due to the war in Iran. So, we are dealing with extremely high energy costs," he told DW."

"Overall revenue generated by German chemical firms has dropped by around 22% since 2022, to 220 billion ($256 billion) in 2025, according to the German chemical industry association VCI. The trade group, which represents around 2,300 companies, said there is no sign of a turnaround, with stagnation or further declines in production likely this year."

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