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According to a report released by the German Chemical Industry Association (VCI) on December 10, production in Germany’s chemical and pharmaceutical sectors is set to stall by 2026, with chemical product output expected to decline by 1% – a reduction that is smaller than that seen this year. Due to falling product prices and production stagnation, both domestic and international revenues in these sectors are projected to drop by 2%. VCI notes that the situation in Germany’s chemical industry continued to deteriorate in 2025: production and producer prices in the chemical and pharmaceutical sectors both declined by 0.5%, while revenue dropped by 1%. Production of chemical products fell by 2.5% on a year-on-year basis, and the industry’s overall revenue, including both domestic and foreign sales, declined by 3%. Currently, the capacity utilization rate in the chemical industry is only 70%, hitting a record low and far from reaching the break-even point. VCI member surveys show a pessimistic sentiment in the industry. 20% of the surveyed companies plan to relocate or completely shut down their production facilities; 10% intend to close their entire manufacturing sites. Over 40% expect their domestic revenue to decline again, and nearly half believe that their profitability will continue to worsen. VCI points out that uncompetitive domestic production costs, high uncertainty in regulatory policies, and lengthy approval processes are the main constraints; coupled with high energy and emission costs, a strong euro exchange rate, overcapacity abroad, U.S. tariff barriers, and geo-economic instability, the operational pressures on the industry have increased significantly. VCI calls on Germany and Europe to advance reforms in the areas of energy and climate, administrative systems, and social security, to formulate long-term industrial policies, and to improve the capital market union and the internal market, in order to achieve climate neutrality and establish a level playing field with China and the United States.