AMSTERDAM/FRANKFURT (dpa-AFX) - The expectation of yet another difficult year for the sector weighed on chemical stocks on Friday. According to analyst Alex Sloane from the British bank Barclays, 2026 is likely to be shaped by sluggish sales volumes, weak price trends, and fragile end markets.

The European sector index Stoxx Europe 600 Chemicals fell by an above-average 1.37 percent in the morning. This puts the recent recovery at risk, after the index dropped by around seven percent in 2025 despite an overall very strong stock market environment.

Chemical companies are not only grappling with problems in Germany and Europe, but also with the severe real estate crisis in China that has persisted for years. In addition, an increasing number of Chinese chemical firms are pushing into Europe with their exports.

Industry capacity utilization remains near historic lows, Chinese exports continue to depress prices in key supply chains, and end markets such as construction, as well as coatings and adhesives, show only limited signs of a sustainable recovery, according to Barclays expert Sloane.

Sloane is particularly cautious about Solvay, Arkema, and Lanxess. However, market profit expectations for Wacker Chemie could also prove to be too high. On Friday, Lanxess shares were the biggest loser in the MDax, down 4.5 percent, while Wacker Chemie dropped 1.6 percent and Evonik fell 2.4 percent.

In the leading Dax index, shares of BASF were at the bottom with a loss of 2.7 percent, while shares of chemical distributor Brenntag fared little better, down two percent.

China's government is attempting to curb overcapacity in many sectors, which is also leading to fierce price competition within the country itself. If this campaign succeeds, it would be extremely positive for European chemical companies, explained industry expert Chetan Udeshi from JPMorgan bank.

However, according to Udeshi, it is difficult to assess whether these measures will be effective, as there is no real evidence so far. Therefore, the prospects for a significant profit recovery remain uncertain for now due to ongoing structural pressures./mis/err/jha/