July 2026

The radar covers events dated within July 2026 and indicators whose reference period includes or immediately informs July. Results published in August are used only when they measure July conditions; August corporate announcements are excluded from the July event count. Multi-year investment programmes are reported as commitments, never as July cash spending. Company statements are labelled as company-reported; VCI survey results are association sentiment, not official statistics. Hard activity data come first from Destatis, VCI’s Destatis-based estimates, Eurostat and other public institutions.

The legacy mood series on Schym.de is retained for comparability. The component methodology introduced here is explicit; historical component scores are not backfilled. Consequently, the July level can be compared with the published headline history, but not with nonexistent historical sub-indices.

Germany’s overall economy grew 0.2% quarter on quarter in the second quarter, after a revised 0.4% in Q1. Exports rose, but investment remained weak. The euro area expanded 0.4%. That is a better macro backdrop than the chemical data imply, which matters: the sector is underperforming not only a global upswing but also the domestic aggregate. (Destatis GDP (opens in a new tab), Eurostat GDP (opens in a new tab))

Hard sector data

Source: VCI’s Destatis-based half-year KPI table (opens in a new tab).

The monthly detail is less bleak but still not a turn. In May, chemicals production rose 1.0% month on month and 3.1% year on year, while January–May remained 3.3% below the prior year. Chemical orders fell 2.2% month on month but were 10.2% above a weak May 2025; the year-to-date increase was 3.1%. Petrochemical production was still down 6.3% year to date and polymers 4.7%. The correct reading is therefore inventory- and disruption-supported stabilisation from a depressed base. (VCI Chemie-Barometer (opens in a new tab))

The June ifo chemical business climate, released on 1 July, improved sharply to −17.8 from −29.0. Current conditions rose to −2.9, but expectations remained deeply negative at −31.5. Separately, 29.5% of chemical companies reported material shortages. No public numerical July chemical-climate reading was verified by the cut-off, so the June value is the latest chemical-specific ifo observation used here. (ifo chemical climate (opens in a new tab), ifo material shortages (opens in a new tab))

July’s economy-wide manufacturing PMI of 52.2 offers a credible upside signal: output and export orders accelerated, while input inflation eased. But chemical hard data and company comments had not yet confirmed a durable demand recovery. The divergence is one of July’s most important open questions.

Electricity averages were calculated from the public Fraunhofer Energy-Charts API (opens in a new tab) for exact calendar months. July contained 2,976 quarter-hours; the API’s inclusive end-point was removed. June averaged €109.59/MWh and July 2025 €87.80/MWh. The frequency change means counts of extreme intervals are not directly comparable with hourly 2025 counts.

The gas market was more damaging. TTF’s 19.5% monthly increase coincided with low European storage and continued disruption around the Strait of Hormuz. Europe was still below 58% full in early August, around 12 percentage points below the prior year, raising the probability of policy intervention or a winter price spike. (Reuters storage analysis (opens in a new tab))

Low Rhine water turned energy pressure into delivered-cost pressure. By 27 July, tanker-barge freight from Rotterdam to Karlsruhe had almost tripled from the end of June. Vessels were forced to sail partially loaded; the chemical industry was better prepared than in 2018, but the cost curve still shifted upward. (Reuters Rhine report (opens in a new tab))

Industrial electricity support: timing corrected

The industrial-power-price framework was approved by the European Commission on 16 April, the implementing directive took effect on 7 May, and the federal government said in its 10 July press conference that state-aid approval for the expanded electricity-price compensation had been obtained that week. The VCI critique often cited with this policy was published in April, not July. The July milestone is therefore implementation/approval progress, not a new July VCI intervention. The scheme covers 2026–2028 and sits alongside electricity-tax relief and network-fee support. (Federal government energy-price package (opens in a new tab), 10 July government press conference (opens in a new tab), April VCI assessment (opens in a new tab))

The policy helps eligible electro-intensive plants, but it does not erase the gap between German industrial costs and advantaged regions. It is temporary, conditional and only partial. This is why energy scores 2.5/10 despite a modest monthly fall in spot power.

The sector’s tangible investment in Germany has fallen from more than €10 billion in 2023 to about €8.9 billion, and the VCI says the latest level is roughly 15% below 2023. Forty-five per cent of surveyed firms expected German investment to fall in 2026, against 22% expecting an increase. Abroad, 40% expected an increase and 19% a decline. (VCI investment spotlight (opens in a new tab), VCI half-year charts (opens in a new tab))

The most frequently named investment barriers were German site costs (86%), energy and climate policy (81%), unreliable industrial policy (61%), rising imports (53%) and the reform agenda (51%). Because this is a trade-association member survey, it measures executive perception rather than audited expenditure. Yet its direction is consistent with the hard capex series, plant underutilisation and company asset-allocation decisions. (VCI member survey (opens in a new tab))

Merck’s €25 million BioReliance release and stability testing facility in Darmstadt is the month’s clearest positive German site decision. It is high-value, GMP-regulated and knowledge-intensive. That is exactly the kind of activity Germany can still win. It also illustrates the bifurcation: specialised life-science infrastructure remains investable while energy-intensive bulk capacity struggles. (Merck (opens in a new tab))

Standort rating: Negative. The evidence does not support “severely negative” for every segment: life science, semiconductor materials and selected specialties retain investment pull. But for basic and energy-intensive chemistry, the combination of subscale utilisation, high energy costs, weaker investment and R&D relocation is now structural.

German chemicals excluding pharmaceuticals exported €58.84 billion in January–May, down 1.3%, while imports fell 5.7% to €41.43 billion. The €17.41 billion surplus therefore widened partly because domestic demand and imports weakened—not because exports boomed. (VCI Chemie-Barometer (opens in a new tab))

The US decline is too large to dismiss as noise and fits the sector’s tariff anxiety. China remains a double pressure: a weakening export destination and the source of global capacity growth. India is a rare positive route, but too small to offset the losses in the US and China.

The July supply-chain picture was paradoxical. Hormuz disruption temporarily reduced Asian competitive pressure and supported European prices, helping BASF, Covestro and Evonik. At the same time, it lifted oil, gas, freight and working-capital requirements. A supply shock can improve quarterly margins for incumbents with available European capacity without improving the long-run attractiveness of that capacity.

The revised Classification, Labelling and Packaging rules introduced clearer label formatting, digital labelling options, hazard information in online advertising and additional poison-centre obligations. Most industry obligations apply from 1 July 2026, with further formatting deadlines and transitions later. (European Commission CLP overview (opens in a new tab))

On 17 July the Commission proposed a targeted EU ETS revision for 2031–2040, including an Industrial Decarbonisation Bank, an Investment Booster and changes to free allocation and CBAM. It remains a proposal. At the same time, the allowance benchmark near €82/t kept the current burden tangible. (EU ETS policy page (opens in a new tab), Reuters carbon-market poll (opens in a new tab))

Regulatory Pressure Index: 7.1/10. CLP implementation and continuing REACH/PFAS uncertainty dominate the burden; electricity support and the ETS investment architecture provide partial offsets. The central problem is less any single rule than simultaneity: companies must fund compliance, decarbonisation and competitiveness while utilisation is low.

Sector employment fell 1% year on year to 471,500 in the first half. That looks mild beside production, but employment is a lagging variable. Company data show the adjustment underneath: BASF reduced its global workforce by about 7,000 between January 2024 and June 2026, excluding divestitures and the Zhanjiang build-up, while Ludwigshafen fell below 30,000 full-time equivalents in May for the first time since 1954. Wacker employed 16,084 people at end-June, down from 16,724 at year-end. (VCI KPI table (opens in a new tab), BASF results (opens in a new tab), Wacker results (opens in a new tab))

Evonik’s plan to eliminate 3,200 jobs by 2029, including 2,150 in Germany, was announced in June and is therefore context, not a July event. Wacker’s roughly 1,600-position programme was likewise announced earlier. Neither is double-counted as a new July restructuring.

Productivity sends a nuanced signal. In May, aggregate chemical-pharma productivity was 2.7% below the prior year and 2.6% lower year to date. Chemicals excluding pharma were 2.9% higher year on year in May but still 0.7% lower year to date. Unit labour costs rose 7.7% year on year for the combined sector and 3.1% for chemicals. The aggregate is therefore smaller and less productive, while pure chemicals show near-stable productivity after workforce and utilisation adjustment. (VCI Chemie-Barometer (opens in a new tab))

No reliable July chemical-specific number for vacancies, skilled-worker shortages, short-time work or wage settlements was verified. Economy-wide ifo data showed that job-cut plans remained dominant across manufacturing even as the overall employment barometer improved to 93.0. (ifo Employment Barometer (opens in a new tab))

BASF: the distinction between earnings and recovery

BASF’s Q2 sales rose 16% to €17.2 billion. Prices added 11.5%, volumes 7.3% and EBITDA before special items rose to €2.4 billion from €1.6 billion, above the €2.1 billion consensus. Yet free cash flow was negative €189 million in Q2 and negative €1.6 billion in the first half. Net income of €4.1 billion included a €3.5 billion after-tax disposal gain from Coatings. The operating improvement matters; the disposal gain is not a chemical-cycle recovery. (BASF final Q2 release (opens in a new tab))

Wacker: the cleanest evidence of cost-led relief

Wacker’s Q2 sales increased 7.4% to €1.518 billion and EBITDA rose 84.9% to €211 million, including a €36.7 million pension effect. Excluding that effect, operating EBITDA was about €175 million. The company raised its EBITDA range to €625–750 million but cut expected sales growth from high-single to mid-single digits. Capex in the first half fell 39.2% to €119.8 million. Management explicitly said there was no demand turnaround in construction and automotive, and Asian overcapacity remained. (Wacker (opens in a new tab))

Covestro and Evonik: the Hormuz dividend

Covestro raised its 2026 EBITDA view after H1 EBITDA reached a preliminary €669 million, attributing the improvement mainly to higher prices while raw-material costs arrived with a lag. Evonik had already raised its outlook in late June because disruption constrained Asian competitors; its July investment decisions—the $100 million Lafayette upgrade and completion of methionine backward integration in Mobile—strengthened the American asset base. (Covestro (opens in a new tab), Evonik Lafayette (opens in a new tab), Evonik methionine (opens in a new tab))

The geographic allocation is the message. July produced one meaningful German high-value facility and several larger strategic actions abroad. BASF’s buyback can be rational for shareholders after the Coatings proceeds, but it does not improve German production capability. (BASF buyback (opens in a new tab), Covestro acquisition (opens in a new tab))

Innovation Momentum Index: 4.5/10. There was real activity, but too little of it was German industrial scale-up.

• Merck opened regulated biopharma-testing capacity in Darmstadt—high knowledge content and a defensible European customer proposition.
• Covestro and BYD signed a partnership covering new-energy vehicles, batteries, storage and advanced materials. It is strategically relevant but centred on a Chinese customer base rather than a new German plant. (Covestro–BYD (opens in a new tab))
• Evonik completed the Americas leg of its global methionine backward-integration network and committed to US pharmaceutical manufacturing modernisation.
• Thirty-seven per cent of VCI survey respondents said R&D was being shifted at least partly abroad; among large companies the proportion reporting partial relocation was 70%. (VCI survey short report (opens in a new tab))
• No new German flagship chemical-recycling, electrified-cracker, low-carbon-hydrogen or large demonstration plant reached a verified July final-investment milestone.

Germany still has scientific and specialised-process strength. The innovation problem is translation: pilot-to-demo financing, energy economics and permitting determine whether knowledge becomes German production.

Covestro completed the acquisition of former Vencorex HDI-derivatives sites in Rayong, Thailand, and Freeport, Texas, on 2 July, reinforcing regional coatings and adhesives supply. No transaction value was disclosed. BASF reported the financial effects of its Coatings disposal in July, but the closing occurred earlier in Q2; it is not counted as a July transaction. Merck’s $11.3 billion Bio-Techne agreement was announced on 25 June and is likewise context, not a July deal.

No major acquisition of a German chemical production asset was newly announced in July. The pattern remains portfolio sharpening and regional balancing rather than broad German capacity expansion.

Month-end Xetra closes show that investors rewarded earnings leverage and restructuring more than broad sector demand. Prices are unadjusted for dividends during July; none of the selected names had a July ex-dividend event that changed the interpretation.

Sources: Yahoo Finance historical Xetra data for BASF (opens in a new tab), Evonik (opens in a new tab), LANXESS (opens in a new tab), Wacker (opens in a new tab), Bayer (opens in a new tab), Henkel (opens in a new tab) and Merck KGaA (opens in a new tab).

The equal-weight seven-stock basket gained 3.5% and the median name gained 2.8%. That supports a 6.0/10 financial-expectations score. But the dispersion is more informative than the average: BASF, Evonik and LANXESS rallied on earnings/cost narratives, while Wacker fell despite raising EBITDA guidance because its sales and end-market message stayed cautious. Covestro is excluded from the return basket because the XRG squeeze-out removed a normal free-market price signal.

Three narratives competed in July:

1. “Atempausing, not turning.” VCI’s own phrase—inventory building and reduced Asian pressure delivered a temporary respite, not a trend reversal.
2. “Corporate rebound.” European chemical companies beat Q2 expectations through pricing, restructuring and consumer/specialty resilience. (Reuters European earnings review (opens in a new tab))
3. “Location erosion.” Investment, R&D and headcount increasingly moved away from high-cost European production.

The media mood is therefore mixed-negative. Earnings headlines improved; the language around German production and future capacity became more structural. The word “deindustrialisation” is no longer confined to political rhetoric because it now maps onto investment, site and employment decisions.

Hormuz traffic remained well below prewar norms even after a June ceasefire-related improvement, and renewed hostilities drove Brent sharply higher at month-end. The shock helped quarterly chemical pricing precisely because it damaged normal trade flows. This is relief through disruption—economically real, strategically unreliable. (Reuters tanker analysis (opens in a new tab))

The sector is splitting by customer economics. Molecules sold into AI, regulated biopharma and branded consumer formulations command different margins and location choices from petrochemicals sold into weak construction and automotive markets.

VCI’s World Chemistry Report measures chemicals excluding pharmaceuticals, year to date through the latest mostly May data.

Source: VCI World Chemistry Report, July 2026 (opens in a new tab).

The conclusion is not “Europe alone is weak.” The EU is weak, but Germany underperformed even the EU by 1.7 percentage points. World chemicals expanded 2.1% and China 5.5%. Germany therefore faces both a European cost problem and a specific Standort problem.

EU27 chemical capacity utilisation remained around 74% in Q1, historically low and below wider manufacturing. Since 2022, announced European chemical closures have accumulated to 37 million tonnes—around 9% of capacity—with about 20,000 direct jobs affected. Those are context figures, not July closures, but they make the structural benchmark visible. (Cefic Q1 trends (opens in a new tab), Cefic closures radar (opens in a new tab))

The radar’s productivity diagnosis is smaller and, at aggregate level, less productive:

• Output: chemical-pharma −3.0% y/y in H1.
• Employment: −1.0% y/y in H1.
• Productivity: −2.6% y/y year to date through May for chemical-pharma.
• Unit labour cost: +4.9% year to date; +7.7% in May year on year.
• Chemicals excluding pharma: productivity −0.7% year to date, suggesting workforce adjustment has nearly matched output loss there.

Nominal sales are a poor proxy for value creation in July because producer prices rose 7.5% year on year in June for the combined sector and 9.0% for chemicals, while physical production remained weak. Price-led sales growth can improve EBITDA without restoring tonnes, utilisation or real value added.

Renewables supplied about 57% of German electricity consumption in the first half, an important structural gain. Yet the July power average remained above €100/MWh, showing that a higher renewable share does not automatically deliver a competitive industrial all-in price when scarcity, networks, balancing and policy costs remain. (German Environment Agency (opens in a new tab))

The heatwave and low Rhine water were July’s clearest environmental operating risk. They affected freight capacity and delivered feedstock costs across western chemical clusters. No major new German chemical accident with a July event date was verified in authoritative public sources. A July report on the 2021 Leverkusen explosion identified self-reactive Danish waste as the cause; it is an investigation milestone, not a 2026 incident.

The decarbonisation challenge remains capital-intensive. Commission modelling indicates that electrification, biomass and hydrogen could remove roughly half of chemical emissions before capture, leaving a significant residual for carbon capture. The issue is not technological imagination; it is affordable electricity, infrastructure and investable project economics. (Commission ETS impact assessment (opens in a new tab))

This is not one cycle. Basic chemistry is fighting utilisation and cost; specialties are fighting customer softness; life science and electronic materials are fighting for scarce high-growth capacity.

Base case — 55% probability: stabilisation without Standort reversal

German chemical output stops falling sequentially but remains below 2021 levels. The full-year 2026 decline lands near the VCI’s −1.5% forecast. TTF averages €40–65/MWh, power remains volatile and corporate earnings improve through pricing, cost reduction and portfolio change. German capex stays weak; high-value life science and electronic-material projects coexist with attrition in basic chemicals.

Confirming triggers: chemical production turns positive on a three-month/three-month basis; orders translate into output rather than inventories; TTF stays below €60; no new wave of German upstream closures.

Upside case — 20%: energy normalisation becomes a real volume recovery

Hormuz transit normalises, European storage refills, TTF falls below €40/MWh and German power averages below €80/MWh for several months. Manufacturing PMI strength reaches autos and construction. Chemical utilisation rises above 80%, domestic investment expectations turn positive and the industrial-power package improves final project economics.

Confirming triggers: two consecutive quarters of positive German chemical output; exports to the US and China stabilise; capex survey balance turns positive; R&D relocation falls materially.

Downside case — 25%: winter energy shock accelerates closures

Storage enters winter too low, TTF moves above €80/MWh and Rhine/logistics constraints persist. Asian overcapacity returns once shipping normalises, removing the temporary European pricing umbrella. More basic-chemical assets close, employment falls faster and Germany’s production gap to the EU widens.

Confirming triggers: storage misses the EU seasonal target; TTF above €80 for four weeks; German utilisation below 72%; multiple final closure decisions; sector employment decline exceeds 2% y/y.

Verdict: strong structural erosion, not collapse. The label “deindustrialisation” is justified for the erosion of basic-chemical capacity, capital formation and employment. It would be imprecise to apply it uniformly to every chemical activity: Germany retains dense clusters, skilled labour, R&D, customer proximity and regulatory trust in high-value segments. The policy objective should therefore be selective reinvestability, not nostalgia for every tonne of legacy capacity.

Chemical Industry Mood Index

Score anchors: 0–2 crisis, 2–4 bearish, 4–6 mixed/neutral, 6–8 constructive, 8–10 strong expansion. Scores reflect the German chemical sector, not equity-investor returns alone.

Legacy trend

The 3-month average is 2.5 and the 6-month average 2.3. A year-on-year comparison is unavailable because the published series begins in October 2025.

Regulatory Pressure Index — 7.1/10

CLP implementation 8.0; REACH/PFAS uncertainty 7.5; carbon/ETS burden 7.0; reporting and implementation load 7.0; offset from simplification and energy aid 4.5. Higher is worse.

Innovation Momentum Index — 4.5/10

Research base 7.0; July German scale-up 4.0; private capital commitment 3.5; international company projects 6.0; domestic commercialisation conditions 2.5. The index says Germany can invent more easily than it can currently industrialise.

Confidence hierarchy

1. High: Destatis, Eurostat, European Commission, Bundesbank, Bundesnetzagentur/SMARD-derived data, official company releases and exchange closes.
2. Medium-high: VCI statistical estimates based on Destatis; ifo and PMI surveys with clear methodology.
3. Medium: VCI member sentiment, company qualitative comments, Reuters market intelligence and commercial benchmarks.
4. Low / excluded: unsourced social posts, recycled articles with wrong event years, modelled market values without transparent period definitions.

No-data tracker

Known comparability limitations

• Energy-Charts switched German day-ahead settlement from hourly to quarter-hourly intervals in October 2025; interval counts require frequency awareness.
• VCI trade data cover January–May, sector KPIs the first half and the World Chemistry Report mostly January–May. The reference periods are stated in every table.
• Company Q2 results combine April–June and cannot be read as July operating activity.
• Survey balances measure management perception and can be more volatile than realised investment.
• Stock returns are price returns from Xetra closes; Covestro is excluded because the squeeze-out impaired normal market price discovery.

July improved the earnings picture without repairing the industrial base. Production, foreign sales, employment, investment and aggregate productivity were all below their prior-year levels. The temporary interruption of Asian supply helped European pricing; it also raised the energy, feedstock and logistics bill. General manufacturing started the third quarter strongly, but chemicals had not yet converted that signal into hard output.

The strategic split is now clear. Germany remains attractive for regulated testing, life science, electronic materials and knowledge-dense specialties. It is unattractive for a growing share of energy-intensive, globally traded bulk chemistry. Policy can narrow that divide, but a three-year electricity support scheme cannot substitute for durable energy, infrastructure, permitting and capital-market conditions.

July offered the kind of improvement that becomes dangerous when mistaken for a reversal.

The companies earned more. The country did not become more investable. Those are different statements, and the radar must resist collapsing them into one.

BASF’s price and volume gains, Covestro’s raw-material lag and Wacker’s cost discipline are not optical illusions. They are competent corporate responses to a disrupted market. Yet the same month shows production down, foreign sales down, employment down, investment down, and research increasingly willing to leave. The relief sits in the income statement; the erosion sits in the asset base.

That is why 3.2 is the right number. Higher than June because companies regained room to breathe. Still bearish because breathing room is not a location strategy.

Germany’s chemical question is no longer whether every old plant can be preserved. It is whether the country can make the next high-value molecule, process and production line investable here. Merck’s Darmstadt facility says yes. The aggregate capex data says: not often enough.

Machine-readable companions: chemical-industry-radar-2026-07.json and chemical-industry-radar-data-2026-07.csv.