German chemical industry with decline in sales and employment
Exports of Chinese chemical producers to Europe rise sharply - increasing competition for German companies
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The German chemical industry is facing another year of crisis: last year, turnover in the German chemical industry fell by 2.9%, and by as much as 22% since the record year of 2022. The employment curve is also pointing downwards: The number of employees shrank by two percent in 2025 and by four percent since 2022. In total, more than 13,000 jobs have been lost in the chemical industry since 2022.
One of the reasons for the chemical industry's weak sales performance is shrinking exports: German companies' foreign sales fell by 3% last year and by as much as 21% since 2022. Exports by German chemical companies to China were particularly weak, falling by ten percent in 2025 - while imports from China increased by almost six percent at the same time.
In view of the current sharp rise in energy prices, Germany's most important locational disadvantage - high energy costs - is likely to become even more significant in the current year and lead to a further worsening of the industry crisis. These are the findings of a recent analysis by EY-Parthenon, EY's strategy and transaction consultancy, on the development of the German chemical industry. The study, which only analyzes companies operating in Germany, is based on current figures from the Federal Statistical Office, the EU statistics authority Eurostat and EY's own company research.
The reasons for the deep crisis in the German chemical industry are manifold, says Jan Kümmel, Partner at EY-Parthenon: "There is a global oversupply of important basic chemicals, particularly because China has massively expanded its production capacities in recent years. Chinese manufacturers are increasingly pushing cheap exports to Europe, threatening the traditional foreign markets of the German chemical industry." Last year, the EU imported chemical products from China for almost 55 billion euros - an increase of almost 23% compared to 2024. The EU's trade deficit with China thus widened significantly: from 9.2 to 22.5 billion euros. "Chinese suppliers are increasingly competing with German producers in Europe - with prices that are not feasible for Germans," says Jan Kümmel.
As a result, the structural disadvantages of the German chemical industry are becoming increasingly apparent, adds Max Dressler, Partner at EY-Parthenon: "The high energy costs in Germany in particular represent an immense competitive disadvantage. In addition, important customers of the chemical industry are themselves in a deep crisis - above all the automotive industry. The order situation is correspondingly thin." The renewed sharp rise in energy prices as a result of the Iran war is further exacerbating the situation, says Dressler: "The air is getting thinner and thinner for the German chemical industry."
Number of insolvencies at a high level since 2023
Medium-sized companies in particular are already struggling to survive, says Dressler: "Many are trying to take countermeasures - for example by cutting costs, reducing staff or specializing - but are reaching their limits. There is a risk that a wave of company closures will roll through the industry if demand does not pick up and there is no relief in terms of costs or taxes."
Last year, 45 insolvency proceedings were filed by companies in the chemical industry, compared to 44 in the previous year, and 48 insolvency proceedings were filed in 2023. In the three previous years, however, the number averaged 30 insolvency proceedings per year. "Insolvencies are no longer an abstract threat, but an everyday occurrence in the industry - and in hardly any other industrial sector are insolvencies as problematic as in the chemical industry," observes Dressler: "If a chemical company goes out of business, this often leaves a gap in existing supply chains, threatening domino effects. Customers lack essential primary products, while suppliers are suddenly faced with sales gaps. Chemical products are often system-critical and customers are usually supplied on a just-in-time basis, i.e. without the need for large inventories. If a supplier drops out, customers in the automotive, construction or pharmaceutical industries cannot easily switch to alternatives. What's more, no other industry bears as great an environmental risk in the event of a plant closure as the chemical industry. Chemical plants work with hazardous substances and often leave behind contaminated facilities and soil. The efforts of all those involved to prevent insolvencies are correspondingly intensive. The fact that the number of insolvencies is currently particularly high shows how difficult the situation is."
Employment: Retaining skilled workers vs. cost pressure
Despite the ongoing crisis, the employment trend in the chemical industry has been comparatively stable in recent years: despite a significant double-digit decline in turnover over the past three years, the number of employees has only shrunk by four percent, which is less than in other industrial sectors. "Companies have so far shied away from major waves of redundancies - mainly to avoid losing their qualified specialists," says Jan Kümmel. "Well-trained staff is still in short supply and is an important asset for Germany as an industrial location. Many companies see their specialists as a critical resource that is urgently needed for the upturn in better times. However, hopes for better times are waning - and this makes cost-cutting programs, which also include job cuts, increasingly likely."
Outlook: Industry is falling deeper into the crisis
A positive trend reversal is not currently to be expected, says Kümmel. On the contrary: "The industry's turnover is likely to fall further in 2026 - which would make 2026 the fourth year of crisis in a row. Economic stimulus effects - for example from the German infrastructure package - are too weak and too slow to bring about a turnaround in the short term. The current sharp rise in energy prices is likely to have a negative impact on economic development, lead to falling demand and also further increase cost disadvantages."
The chemical industry must reduce costs and become more efficient without losing its substance, emphasizes Dressler. "The industry is faced with the task of reducing overcapacity or opening up new sales markets in order to improve capacity utilization again. Companies will have to specialize in order to become less dependent on the pure mass base business, where price pressure is greatest." At the same time, consolidation in the industry is likely to continue. "Less profitable locations and companies will disappear from the market or be integrated into stronger units. A further increase in insolvencies would be devastating - this would considerably weaken Germany as an industrial location overall."
Note: This article has been translated using a computer system without human intervention. LUMITOS offers these automatic translations to present a wider range of current news. Since this article has been translated with automatic translation, it is possible that it contains errors in vocabulary, syntax or grammar. The original article in German can be found here.
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