Germany’s chemical industry is mired in a severe crisis, with capacity utilization hitting a record low.

As the backbone of Europe’s "Northwest European Industrial Corridor," the "Golden Triangle" in the Lower Rhine region—Ludwigshafen, Leverkusen, and Frankfurt—accounts for nearly 80% of the country’s chemical production. Global giants such as BASF (the world’s largest chemical company) and Bayer are clustered here, driving the production, supply, and sales of specialty chemicals, pharmaceutical intermediates, and high-performance materials.

However, according to recent data from the German Chemical Industry Association (VCI), the sector experienced a significant downturn in the second quarter of 2025: capacity utilization plummeted to 71%, the lowest production level since German reunification in 1991. Similar to the overcapacity crisis following the integration of East German factories, the industry is once again facing serious challenges. At the same time, high U.S. tariffs continue to fuel market uncertainty.

A capacity utilization rate of 71% means most plants are operating unprofitably (VCI’s profitability threshold is around 82%). Major German chemical companies such as BASF, Covestro, and Lanxess are likely to continue reporting losses in their domestic operations in 2025—as in previous years, these firms rely almost entirely on overseas markets in Asia and the Americas to remain profitable overall.

Domestic production declined again, falling 5% year-on-year in Q2 2025, while order backlogs in early August hit their lowest level since 2009—a fundamental alarm bell for the chemical industry. Over the past two years, BASF, Dow, INEOS, Celanese, and Huntsman have successively shut down production units. As experts noted, "brief hopes for an economic recovery in chemicals have been completely shattered."

The chemical industry is considered a barometer of the economy, with global influence spanning nearly all manufacturing sectors—yet the current reality remains grim. Meanwhile, policy-related uncertainties continue to loom large. Christian Kullmann, CEO of Evonik, stated in an interview that continued policy volatility in the U.S. would inevitably increase economic uncertainty. The specialty materials giant expects its full-year 2025 adjusted EBITDA to be at the lower end of its forecast range (€2.0–2.3 billion)—provided the global economy does not weaken further.