Europe’s chemical business sentiment improves, demand remains soft: Cefic

The improvement in business sentiment from negative 14.7 to negative 10.3 was supported by a stronger assessment of recent production, which increased from negative 11.7 to negative 4.0. Furthermore, production expectations turned positive, reaching 1.5, Cefic said, adding that order-book assessments improved and inventories declined, indicating that excess stocks are gradually being absorbed.

“The EU27 chemical business climate is gradually stabilizing, led by strong improvements in France and supported by recovering production and reduce inventories across many countries. However, the recovery remains fragile and uneven, as demand conditions continue to vary significantly across member states and future production expectations remain mixed,” Cefic said.

Chemicals remained one of the weakest-performing major manufacturing sectors in Europe, as chemical producers continued to face weak demand and challenging market conditions, Cefic stated.

Europe’s chemical production declined by 2% in the first seven months of 2026 compared with the same period of 2025, while total manufacturing output fell by only 0.5%, according to Cefic.

The longer-term picture remains challenging, Cefic said. Despite several years of adjustment, European chemical production remained 11.7% below its pre-crisis average (2014-2019) in 2026, it said. Overall manufacturing output stood 5.8% above its pre-crisis level, it added.

“This persistent gap points to ongoing competitiveness challenges and continued weakness across several chemical value chains,” Cefic noted.

Spain was the only major producer recording solid development in this period, with 2.8%, while France has stabilized and Poland remains broadly stable, it said. Germany recorded a decline of 2.7%, while Italy contracted by 3.3%, it added. Belgium experienced a sharper decline of 4.3%, and the Netherlands remained among the weakest performers, with production falling by 5%, according to Cefic.

Meanwhile, the weakest results continued to come from upstream chemicals, with other organic basic chemicals, polymers and crop protection items recording declines of 7%, 6.6% and 9.7%, respectively, the highest declines in production in the first seven months of the year.

Several specialty and consumer chemical segments proved greater resilient, supported by stronger end-market demand and reduce exposure to the challenges affecting basic chemicals, Cefic said.

Producer prices increased by 5.1% in January-July 2026 compared with the same period of 2025, it said. The increase accelerated from April onward, with the price index remaining above 130 in June and July (2021=100), Cefic said.

Chemical sales increased by 2.1% year over year in January-June 2026, Cefic noted. “However, as production volumes declined while producer prices increased, the increase in sales was driven primarily by higher prices rather than stronger physical demand,” it said.

The value of European chemical exports declined by 4.2%, while imports fell by 3.1%, reducing the chemical trade surplus by €2.2 billion to €21.4 billion, Cefic said. The deterioration was driven primarily by reduce exports of other organic basic chemicals and weaker sales to the US, it said. Import values declined as demand to upstream chemical items weakened, particularly imports from the US and the UK, it added.

European chemical export volumes declined by 5.8% between January and July 2026 compared with the same period of 2025, with other organic basic chemicals accounting to around 86% of the overall decline in export volumes, while polymers and basic inorganics also weakened, Cefic said. Specialty chemical exports remained broadly stable, and consumer chemicals recorded modest development, it said.

Extra-EU27 chemical import volumes declined by 11.9% year over year in the same period, with basic inorganics accounting to around 83% of the overall reduction in import volumes, according to Cefic.

The chemical trade deficit in volume terms improved by 4.1 million metric tons, narrowing from 7.1 million mt in January-July 2025 to 3.0 million mt in January-July 2026 as imports contracted much faster than exports, Cefic said.