March 2026

Production, sales, and employment

The VCI's fourth-quarter report, published on March 13, confirmed that 2025 had ended with chemical output down 3.3% for the year and capacity utilization at 72.5%. Chemicals and pharmaceuticals employed just under 478,000 people, down 0.5%, while chemical employment alone fell a little more than 1%.

The report's timing was unfortunate but analytically useful: it established that the Middle East shock had hit a sector already operating below its profitability threshold. The ifo survey then measured the deterioration. The chemical business climate fell to -25.0 from -16.7 in February. Employment expectations reached -32.1, the lowest value in the series. That was not a general German labor-market statistic. It was the sector's own forward assessment.

The collective agreement reached on March 25 made the adjustment concrete. Wages are scheduled to rise 2.1% in early 2027 and another 2.4% in 2028. Employers will contribute €300 per employee in both 2026 and 2027 to a job-security fund. The agreement did not cause the weak outlook. It revealed it.

Sources: VCI Q4 2025 report, ifo March chemical climate, Reuters — chemical wage agreement

Energy: a monthly shock with structural consequences

Destatis reported producer energy prices up 7.5% from February. The year-on-year comparison remained negative at -3.2%, which can look benign if read without the monthly move. For chemical companies, the sequence matters. Production decisions respond to current replacement costs, not to favorable base effects.

Oil-linked feedstocks and logistics transmitted the shock quickly. Companies announced substantial price increases for selected amines, polymers, silicones, and intermediates. The ability to execute those increases depended on product scarcity and customer switching costs. Basic chemicals with excess capacity remained exposed to margin compression.

The German industrial electricity subsidy was still pending at month-end. The government notified the European Commission on April 1. March plants therefore faced the shock without that instrument. Existing network-cost relief, electricity-tax reductions, and Strompreiskompensation softened the burden for eligible users but did not create a uniform five-cent electricity price.

Sources: Destatis producer prices, March, Financial Times — chemical price increases, Federal energy measures

Green Deal, REACH, and subsidies

On March 4, the European Commission proposed the Industrial Accelerator Act. The proposal sought to strengthen clean industrial capacity and demand for lower-carbon European products. The relevant tension for chemicals was immediate: local-content and resilience instruments can support demand, but compliance conditions add little value if plants cannot finance conversion.

On March 11, the Commission terminated the REACH restriction process for substances in single-use baby diapers. The narrow decision mattered as a governance signal: not every restriction proposal proceeds when the evidence and proportionality case are insufficient. That is how risk-based regulation should work.

Sources: European Commission — Industrial Accelerator Act proposal, European Commission — REACH restrictions

Lanxess was the cleanest cyclical signal. Sales fell 10.9%, and adjusted EBITDA fell 16.9%. Management expected improvement in the second half at the earliest and targeted €100 million of additional savings. The 550 job reductions followed from a cost base sized for demand that had not returned.

Wacker's €805 million net loss included substantial impairment and restructuring effects, but the dividend cancellation had a simpler message: cash preservation took priority. BASF's inauguration of the Zhanjiang Verbund in China, while Ludwigshafen remained in a multi-year savings program, sharpened the geographic comparison. German competence was still central. Marginal capacity growth was not.

Sources: Bayer FY2025, Covestro squeeze-out, Evonik FY2025, Lanxess FY2025, Wacker FY2025, Merck FY2025

The Circular Valley Convention in Düsseldorf on March 11–12 brought BASF, Bayer, Evonik, and Henkel together around circular business models. An AI and circular-economy conference in Cologne likewise connected materials companies with digital providers. These initiatives addressed a real bottleneck: circularity is partly a chemistry problem, but also a traceability, sorting, and contracting problem.

The limitation was economic. A pilot that converts waste or CO₂ into a product is not equivalent to a bankable industrial asset. Scale requires predictable feedstock, energy, carbon, and offtake prices. March made each of those variables more volatile.

Sources: Circular Valley Convention, AI & Circular Economy Conference

One-month equity performance

Method: February month-end to March month-end Xetra closes, unadjusted and rounded. Up is above +2%; Down below -2%; otherwise Neutral.

The dispersion matters more than the average. BASF and Evonik rose despite a deteriorating operating climate, consistent with product-price expectations and low starting valuations. Henkel and Merck gave back prior gains as investors questioned earnings resilience and deal economics. The market did not price a uniform chemical recovery.

Analyst-rating tape

Deutsche Bank recorded Bayer as Hold on March 5. The prior public entry was also Hold, so this was not an upgrade. No verified Goldman Sachs upgrade or downgrade for the eight-name universe was found in the March window. The evidentiary threshold here is deliberately strict: target-price commentary without a rating change is not counted as an upgrade or downgrade.

Price sources: BASF, Bayer, Covestro, Evonik, Lanxess, Wacker, Henkel, Merck KGaA. Rating source: Deutsche Bank recommendation history.

Headline and Mood Index

Media method: Public headlines and indexed snippets from Handelsblatt, FAZ, CHEManager, and Börsen-Zeitung were reviewed for vocabulary and emphasis. Paywalled or crawler-restricted text was not used as the sole support for a factual claim.

The headline vocabulary changed from “no recovery” to “shock.” Handelsblatt later summarized March as a collapse in sentiment with job losses threatening. CHEManager's editorial language stressed expensive energy, labor costs, regulation, and political inaction. FAZ and Börsen-Zeitung headline samples emphasized company results and market moves; neither supplied a credible recovery narrative.

Sources: Handelsblatt — sentiment collapses, jobs threatened, CHEManager — Lone Voices in the Desert, Reuters — March ifo shock

What Would Change the View?

The March reading would improve if the energy shock proved short, price increases held without destroying volume, and employment expectations recovered. The opposite boundary condition is more severe: prolonged disruption through the Strait of Hormuz would convert a margin shock into a physical supply problem. March ended between those states. Neither was compatible with calling a recovery.