EU chemical industry recovery ‘yet to emerge’ as output falls further

Brussels – The EU27 chemical industry remained under pressure during the first seven months of 2026, with falling production, weak demand and global competition continuing to undermine recovery.

Chemical production declined 2% year-on-year between January and July, compared with a 0.5% fall in overall manufacturing output, according to the latest trends report by European chemical industry council Cefic.

Despite improving business confidence and easing inventory pressures, the industry remained under strain, with a “broad-based and sustainable recovery” yet to emerge, Cefic said 5 Oct.

The association highlighted continuing weakness in upstream chemical production, particularly polymers and organic basic chemicals.

Output of polymers declined 6.6% year-on-year during the seven-month period, while production of “other organic basic chemicals” fell 7%.

The declines reflected “weak demand, global overcapacity and persistent competitiveness pressures”, according to Cefic.

By contrast, other chemicals recorded growth of 3.6%, while consumer and speciality chemicals proved more resilient than upstream segments.

Overall, EU chemical production remained 11.7% below its pre-crisis average for 2014-2019, while manufacturing output stood 5.8% above its pre-crisis level.

The figures, Cefic said, pointed to “ongoing competitiveness challenges and continued weakness across several chemical value chains.”

Performance across major European chemical-producing countries remained “highly uneven”, with Spain recording a year-on-year output growth of 2.8% over the first seven months of the year while France remained broadly stable.

Over the same period, production declined in Germany by 2.7%, Italy by 3.3%, Belgium by 4.3% and the Netherlands by 5%, while Poland recorded a marginal 0.2% decline.

Meanwhile, EU27 chemical sales increased 2.1% year-on-year in the first half of 2026, with Cefic attributing the rise primarily to higher prices rather than stronger demand.

Producer prices increased 5.1% during January-July, while physical output continued to contract.

The increase in turnover, Cefic said, “does not signal a recovery in physical activity.”

Business confidence improved from -14.7 to -10.3 during the first eight months of 2026, supported by stronger production assessments, improving order books and declining inventories.

However, employment expectations deteriorated from -6.7 to -12.9, suggesting that producers remained cautious.

“Demand remained well below normal levels,” Cefic said, adding that the recovery was “still fragile” and had yet to translate into stronger hiring intentions.

Globally, chemical production increased just 1% year-on-year during January-July, with growth increasingly concentrated in China, where output rose 3.8%.

By comparison, production declined 2.1% in the US and 3.8% in Japan.

Overall, Cefic warned that “weak demand, falling production, upstream overcapacity and intensifying global competition” continued to constrain Europe's chemical industry.