German chemical industry sentiment ticks up in January despite weak conditions, Ifo says

By Anastasiia Kozlova and Amir Orusov

Feb 2 (Reuters) - Business confidence in Germany's chemical industry improved slightly in January as demand stabilised and order backlogs rose for the first time in several months, even as business conditions remained weak, an Ifo survey showed on Monday.

The Ifo index for the sector edged higher, reaching -23.5 points after seasonally adjusted -24.6 points in December. Expectations brightened, rising to -11.4 points from a seasonally adjusted -19.3 in the prior month.

The current situation deteriorated, falling to -34.9 points from seasonally adjusted -29.7 points in December.

"The chemical industry is somewhat less pessimistic about the future," Ifo industry expert Anna Wolf said.

But despite the positive signals, companies still plan to scale back production in the coming months and continue reducing staff, Ifo said.

"The sector remains in a difficult situation marked by weak current business, persistent price pressure, and a lack of export momentum," Wolf said, adding that 2026 looked less destabilising than 2025, though not yet like a robust recovery.

UNEVEN IMPACT FROM PRECIOUS METAL PRICES

The chemical industry is not immune to sharp price increases in precious metals, including platinum, palladium and rhodium, which are used in areas such as silicone production, speciality polymers and hydrogen-related applications.

The impact from this will be moderate and uneven, Wolf said. "Price increases are more likely to be targeted, product- or contract-specific than a generalized price wave."

Wacker Chemie WCHG.DE became the latest company to react to the situation when it said in January it would increase prices for several silicone products by up to 25%, and even higher in some cases, due to higher platinum prices.

"If precious metal prices remain elevated or continue to show double-digit percentage volatility, this would likely weigh on margins in 2026, particularly for companies with catalyst- and energy-intensive processes," analyst Abed Jarad from mwb research said.