Germany's chemicals lobby sees serious disruptions from war in the Middle East

March 13 (Reuters) - German chemicals lobby VCI said on Friday it expects potential persistent disruptions from the closure of the Hormuz strait to cause inflationary pressure and unsettle markets, piling onto the difficulties the sector has experienced for years.

The association, which represents around 2,300 companies, did not provide an outlook for the industry in 2026, due to the U.S.-Israeli war on Iran, it added.

Germany's chemicals sector, the country's third-largest industry employing around half a million people, faces mounting pressure from high production costs, bureaucratic burdens and a stagnating economy, compounded by U.S. tariffs on imported goods.

"Overall, the industry is suffering from weak industrial activity, high import pressure and intense price competition," VCI summarized in a statement.

In the fourth quarter of 2025, the industry recorded a small rise in production of 1.9%, largely due to the pharmaceutical branch, while chemicals firms saw their production fall by 2.9% compared to the fourth quarter of 2024.

Revenue, however, fell by 2.8% compared to the fourth quarter of 2024, to 51.8 billion euros ($59.6 billion), led by a 3.0% drop in domestic sales.

"The annual results for the chemical industry are abysmal – production, sales and prices are all in the red," VCI Managing Director Wolfgang Große Entrup said.

"2026 will not be any easier," he added.

($1 = 0.8697 euros)