Iran conflict gives short-term boost to Germany’s chemical industry

Germany’s chemical industry, which has been going through a difficult period, has received a short-term boost amid the escalation of tensions involving Iran, as industrial customers have begun increasing inventories over fears of supply disruptions.

According to dpa, citing data from the industry association VCI, production and sales in the chemical sector rose by 2% in the first quarter compared to the previous quarter of 2025.

Revenue increased across all major segments, including basic and specialty chemicals, petrochemicals, and personal care products.

The association noted that the rise in orders is partly linked to “precautionary purchases and inventory building in response to the escalation in the Gulf.”

Overall, seasonally adjusted sales in Germany’s chemical and pharmaceutical sector increased by 2.1%, reaching nearly €51 billion, while capacity utilization also slightly improved from a low level.

However, VCI head Wolfgang Grosse Entrup stressed that this does not represent a sustainable recovery.

"We are not seeing a mood of optimism, but geopolitical hoarding," Grosse Entrup said. "This is a panic-driven temporary peak from which parts of the chemical industry are benefiting in the short term."

The association expects production in the sector to decline over the course of the year.

By Jeyhun Aghazada