FRANKFURT (dpa-AFX) - The war in Iran has further darkened the outlook for the German chemical industry, which has already been mired in a deep sectoral crisis for some time. Due to high levels of uncertainty, the German Chemical Industry Association (VCI) withdrew its forecast for the current year, as announced in Frankfurt on Friday. Most recently, the VCI had expected stagnant production for the chemical-pharmaceutical industry as a whole and a one percent decline for chemicals alone. With falling prices and stagnant production, this was projected to result in a revenue decline of approximately two percent.

"The annual balance sheet for the chemical industry is abysmal - production, sales, and prices are all in the red," said Director General Wolfgang Große Entrup, summarizing the past year for the sector. 2026 will not be any easier. Even before the war in Iran, there was no sense of optimism. The industry is suffering overall from a weak industrial economy, high import pressure, and intense price competition.

Now, the war in Iran is creating further risks due to the blockade of the Strait of Hormuz, the manager stated. In addition to oil and gas supplies, there could be serious and increasing supply bottlenecks for raw materials such as ammonia, phosphate, helium, and sulfur. There are already indications of disruptions in international supply chains. The longer the war lasts, the more severe the consequences will be. "High prices and persistent uncertainty are pushing many companies to their limits."

Many chemical groups have already launched austerity programs due to the economic situation. For instance, the Ludwigshafen-based chemical giant BASF is cutting thousands of jobs as part of its cost-cutting measures: around 4,800 employees will have left the company between December 2023 and December 2025, CFO Dirk Elvermann said at the end of February. According to BASF, about half of these cuts are in Germany. The association stated that an end to job cuts in the chemical industry is currently not in sight.

Last year, the chemical and pharmaceutical industry, with 478,000 employees, suffered from weak demand and cheap competition from China. Revenue in 2025 shrank by 1.4 percent to 219.6 billion euros. Production fell by 0.5 percent./mne/stk