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2026-07-16 19:14:13
[German Chemical Industry Association Warns of Irreversible Eastward Shift in Industry, Further Damaging Domestic Recovery Expectations] ⑴ The German Chemical Industry Association (DCIA) predicted on Thursday that output in the chemical and pharmaceutical sectors will decline by 1.5% in 2026, stating that weak European demand coupled with the continued shift of growth and investment to Asia is completely undermining the foundation of the industry's recovery. ⑵ First-half production had already shrunk by 3%, and sales fell to €106 billion, a 1% year-on-year decrease. Although producer prices rose by 2%, it was insufficient to offset the profit erosion caused by the simultaneous decline in both volume and price. ⑶ The association's chairman pointed out that demand for chemical products in Europe is at most flat or even partially shrinking, while Asian customers are expanding production and relocating their processes locally, leading to an accelerated export substitution effect in Europe. ⑷ The association had previously refused to release industry forecasts for several months due to the uncertainty of the Middle East situation, but believes that any recent marginal improvement is insufficient to constitute a comprehensive turning point. ⑸ Although the supply disruptions caused by the conflict briefly benefited some European producers, Asian competitors, who are more reliant on raw material imports, were more severely impacted. However, this effect is completely insufficient to offset the systemic weakening of demand and investment. (6) The divergence between a pessimistic industry outlook and upward profit forecasts by individual companies reflects that German chemical giants are accelerating the transfer of production capacity to the Asian market, and their domestic production networks face the long-term risk of hollowing out.
