Iran conflict boosts German chemical industry sales

Germany's chemical and pharmaceutical industry saw a boost from the Iran conflict in the second quarter, with sales rising significantly for the first time in three years, industry association VCI said on Thursday, reported dpa.

Sales increased by 7.3% from the previous quarter, driven by a 2.4% rise in production and a 5.7% increase in prices.

According to the VCI, the higher prices were partly due to war-related supply chain problems affecting competitors in Asia and the Middle East, which are more dependent than European producers on shipments through the Strait of Hormuz.

Many customers also stocked up on supplies in response to the US-Israeli war with Iran, the association said.

However, the VCI described the improvement as only a temporary respite. German production facilities remained well below normal capacity, operating at 73.2%, while orders and sales had already begun falling again in June.

"Stockpiling and geopolitical upheavals do not represent a turnaround. The old problems have not simply vanished into thin air. German industry finally needs a consistent course of action to boost competitiveness," VCI president Markus Steilemann said.

The association expects production to decline by 1.5% in 2026 as a whole, having lowered its forecast several weeks ago. At the beginning of the year, it had expected production to stagnate.

Higher producer prices are expected to lift industry sales by 2.5% for the full year, according to the VCI.

However, persistently weak capacity utilization, high cost pressures and subdued industrial activity are expected to continue weighing on business in the second half of the year.