German chemical industry business expectations fell sharply in May, reaching the lowest level since October 2022, according to the Ifo Institute. The index dropped to minus 42.0 points, more than 10 points below April's reading. While current conditions improved slightly, the outlook remains grim for overseas buyers sourcing from Europe's largest chemical market.
Business expectations hit new low
The Ifo Institute's monthly survey shows German chemical industry business expectations plunged to minus 42.0 points in May, down from minus 31.8 in April. This marks the lowest level since October 2022. However, companies assessed their current situation more positively at minus 17.5 points, an improvement of about 8 points from the previous month.
Temporary boost from Iran conflict
The Iran war, which began in April, has created a temporary special economic situation for the chemical sector. Disrupted global supply chains have increased demand for chemical products, benefiting some industry segments. Ifo expert Anna Wolf cautioned: "Companies view the current upturn in ongoing business as temporary."
Structural challenges persist
Germany's chemical industry, with annual sales of approximately €220 billion in 2025, has been in crisis for years. The sector faces high energy costs, competition from Asia, weak economic conditions, and overcapacity in basic chemicals. The Iran conflict has provided a breather, as Asian competitors are more affected by the conflict and more dependent on raw material supplies from the Middle East.
What buyers should watch
Despite temporary price increases by companies like BASF and panic buying by customers fearing supply shortages, German chemical firms plan to reduce production and further cut staff. Export expectations have also deteriorated significantly. "The temporary special economic situation gives the industry short-term breathing room, but the structural core problems remain unresolved," Wolf stated. Overseas buyers should monitor potential supply disruptions and pricing volatility in European chemical markets.
Source: Read the original report | Published: May 28, 2026