Germany’s BASF says H1 chemical sales drop 6% YOY amid challenging conditions

German chemical producer BASF said July 30 that chemical sales fell 5.8% year over year in the first half of 2025 due to challenging market conditions.

According to the company's July 30 earnings report, second-quarter sales for the segment also fell, sliding by 11.9% year over year. The company said the particularly weak performance in the chemicals segment underlined "negative price developments in four of [the company's] six segments."

Global overcapacity and sluggish demand were critical pressures underscoring the weakness in chemical sales, it said.

Markus Kamieth, CEO and chairman of the board of executive directors at BASF, highlighted the "unfavorable supply and demand situation for base chemical."

"Particularly relevant for us is the continued high product availability in the chemical market, which is resulting in ongoing margin pressure, especially in the upstream businesses and base chemicals," he said in an earnings call accompanying the release.

The company also cited currency weakness as a negative pressure on the chemical division.

The earnings report highlighted weak margins across cracker products and specifically the propylene value chain.

Intermediates' performance saw a similar downturn, provoked by lower volume and prices, it said. Prices in Q2 fell by 15% year over year for petrochemicals and 7.1% for intermediates over the same period, according to BASF, contributing to a drop of 12.4% in wider chemical segment prices.

The volume decline, by contrast, was less stark, with a negligible fall of 1.1% from Q2 2024 in petrochemicals and a rise of 0.8% in intermediates.

Polymer-grade propylene prices averaged Eur892.09/mt FD NWE across H1 2025, according to Platts data by S&P Global Energy, up 3% from H2 2024 but down 9% year over year, as an outage-driven peak in pricing in Q1 waned amid oversupply and demand weakness across downstream value chains.

The difficult quarter and H1 for the company echo broader European and global industry conditions amid weak demand and excess supply.

This trend has been exacerbated in Q3 to date, with seasonal summer slowdown provoking further slowdown in trading activity and demand, according to market sources.

Many European participants are also paying close attention to potential shifts in trade flows following an EU-US trade deal, which levied 15% tariffs on European exports to the US. The tariffs are set to commence on Aug. 1.

BASF said any impact from the tariffs on its chemicals segment will remain limited, while highlighting that its favourable position within localised supply chains and markets across its European, Asian and US operations served as a shield against most adverse effects.

"Some of the chemicals are privileged in part with lower tariffs. Sometimes they are completely exempt, but that's a moving target," Kamieth said. "From my point of view, there is no big news ... we have a good local footprint in every region, so we don't rely on sending products or precursors through the region."

Despite this, ongoing macroeconomic and geopolitical tensions continue to weigh heavily on sentiment.

BASF adjusted its outlook for 2025 lower, saying that "the rise in market demand for chemical products will not be as significant in 2025 as previously expected ... due to sustained high product availability in the market." It also expects weak growth across major economic segments, dollar depreciation and slow global industrial output.