Strained atmosphere in the chemical industry persists, with BASF and Lanxess continuing to thrive
The German chemical industry is grappling with a series of challenges in the current global trade environment, as highlighted by the performances of major players like BASF and Lanxess.
The 2025 EU-US trade deal, along with related geopolitical tensions, has had a significant negative impact on the sector. The deal imposes tariffs on German exports to the US, including a 50% tariff on steel and aluminum, which are crucial inputs for the chemical sector. These tariffs raise production costs and weaken competitiveness in the US market, a key destination for German chemical exports.
The chemical industry in Germany is heavily exposed due to its scale and integration with other sectors like automotive and construction. It relies on U.S. buyers for products including plastics and high-value chemical compounds. The tariffs add cost burdens and disrupt integrated supply chains spanning EU borders, thus reducing Europe's competitiveness versus Asia and U.S. producers.
Investment and market confidence have declined sharply amid the tariff imposition and lingering uncertainties. This is reflected in a significant drop in German investor morale and the ZEW economic sentiment indicator in August 2025. The sentiment was notably worsened for chemicals and pharmaceuticals alongside machinery and automotive sectors.
BASF and Lanxess, being leading German chemical firms, face these challenges directly as they deal with compressed margins and must adapt strategies to these new trade conditions. This adaptation includes potential supply chain diversification, cost optimization, and possibly shifting some production to Asia or Eastern Europe to mitigate tariff impacts and geopolitical risks.
Broader geopolitical tensions also exacerbate these difficulties. While the U.S.-China tariff reductions seen earlier in 2025 provided some relief for the Chinese chemical market, uncertainties persist globally, and trade tensions continue to influence global pricing and competitiveness indirectly affecting German manufacturers.
The Ifo Institute reports a drop from -9.7 to -19.2 points in the chemical industry sentiment in July. Companies in the survey period planned further job cuts, and the Ifo expert, Anna Wolf, states that the chemistry industry's hope for an economic recovery has vanished. Employment expectations in the chemical industry are declining, with the stop-loss for BASF shares remaining at 31.00 euros and Lanxess' position continuing to be protected at 19.50 euros.
Mr. Bernd Foertsch, the management and majority shareholder of the publisher Boersenmedien AG, has entered into direct and indirect positions in BASF shares. The publication contains material from dpa-AFX.
[1] Trade tensions impact German chemical industry, Deutsche Welle, 2025. [2] US-China trade deal offers some relief to Chinese chemical market, Chemical & Engineering News, 2025. [3] German chemical industry faces increased costs and supply chain disruptions, Reuters, 2025. [4] Global trade tensions continue to influence chemical pricing and competitiveness, ICIS, 2025. [5] German chemical industry sentiment plummets amid trade tensions, Chemical Week, 2025.
The 2025 EU-US trade deal and related geopolitical tensions have adversely affected the German chemical industry, particularly its finance and business prospects. The increased tariffs on German exports to the US, such as steel and aluminum, required for chemical sector production, amplify production costs, weaken competitiveness, and negatively impact profit margins for major players like BASF and Lanxess.
These challenges have led to a decline in investment and market confidence, as shown by the significant drop in German investor morale and the ZEW economic sentiment indicator in August 2025. The chemical industry, along with other sectors like automotive and machinery, has been notably negatively affected.
