German chemical industry revenue down 22% since 2022 as energy costs and weak demand persist

Revenue at German chemical firms fell to €220 billion ($256 billion) in 2025, a drop of about 22% since 2022, 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.

High energy costs, regulatory burdens, and weak European demand are driving companies to cut jobs and expand production abroad. The industry has lost over 13,000 jobs since 2022, reported chemeurope.com, a specialist portal for the chemical sector. BASF, the German chemical giant, has embarked on cost-cutting in Germany and is investing abroad, particularly in China, and has outlined plans to shift certain back-office jobs from Germany to Asian countries like India and Malaysia.

"Energy prices, especially natural gas prices, have doubled since the war in Ukraine started," said Christof Günther, managing director of InfraLeuna, which operates the Leuna Chemical Park, Germany's largest integrated chemical site. "And they have just doubled again temporarily due to the war in Iran. So, we are dealing with extremely high energy costs," he told DW.

Anna Wolf, chemicals industry expert at the ifo Institute, said the burden is on policymakers to ensure energy is available "in sufficient quantities, at internationally competitive prices, and through infrastructure that the chemical industry can actually rely on for its long investment horizons." Without reliable, affordable energy and the infrastructure to deliver it, "no other measure — whether on regulation, trade or innovation — will be sufficient to restore competitiveness," she told DW.

"Market conditions have shifted to the detriment of the German chemical industry in recent years," Martin Gornig, research director for industrial policy at DIW Berlin, told DW. In addition to energy woes, he said, this is primarily due to weak economic demand for chemical products in Europe. "Should the domestic economy in Europe pick up again, the outlook for the German chemical industry will also improve."

To boost the sector, the German government wants to subsidize electricity costs and push for reforms to the EU's carbon pricing system. VCI welcomed the measures but said more is needed, urging tax incentives, guaranteed long-term gas supply, and greater use of biomethane. The association also called for addressing lengthy permitting procedures and growing regulatory burdens. "The industry urgently needs reliable and internationally competitive framework conditions. Isolated measures are no longer sufficient," VCI said in a statement to DW.