German business sentiment in the chemical industry reached its highest level in four years this August. The Ifo institute’s business climate index for the sector jumped to minus 2.4 points from minus 26.3 in July. The gauge for current conditions recorded its first positive reading since July 2022.
Supply chain disruptions in Asia and the Middle East fueled this recovery by increasing global demand for German exports. Major industry players BASF and Evonik recently raised their full-year profit forecasts in response to the improved outlook.
Ifo experts warned that the rebound remains fragile and dependent on continued external disruptions. Capacity utilization for the third quarter stays significantly below the long-term average. These underlying conditions suggest the sector has not yet achieved a full-fledged recovery.