Why does VCI describe the Q2 growth in Germany's chemical industry as 'encouraging but misleading'?

VCI describes the Q2 growth as 'encouraging but misleading' because the 3% quarter-on-quarter production increase and 5.7% rise in producer prices were driven primarily by temporary, one-off factors—namely stockpiling behavior and supply chain disruptions caused by the Iran war—not by underlying demand recovery or improved competitiveness. As VCI President Markus Steilemann stated, 'Stockpiling and geopolitical upheavals do not signal a turnaround; the old problems have not vanished into thin air,' and the association emphasizes that rising raw material and energy costs, persistently weak capacity utilization (73.2%, well below the long-term average of 83%), and a subdued industrial economy confirm the upturn is not sustainable.

What is VCI's full-year forecast for Germany's chemical and pharmaceutical production and sales, and what explains the divergence between them?

VCI forecasts a 1.5% decline in chemical and pharmaceutical production for the full year, while expecting industry sales to rise by 2.5%. This divergence is explained by the fact that higher producer prices—up 5.3% year-on-year in Q2—are expected to support sales revenue despite falling output volumes. The association explicitly attributes the sales growth to pricing power rather than volume gains, noting that continued weak capacity utilization, high cost pressures, and a sluggish industrial economy will weigh on business performance in the second half of the year, reinforcing that the Q2 uptick reflects transient conditions, not structural improvement.

German chemicals grow in Q2, but stagnant full year still expected

Sep 3, 2026

Germany's chemical industry saw a 3% production rise and 5.7% price increase in Q2 due to stockpiling and supply disruptions, but VCI forecasts a 1.5% annual decline amid high costs and weak demand.

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German chemicals grow in Q2, but stagnant full year still expected

German chemicals grow in Q2, but stagnant full year still expected

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