Eastern Germany's chemical industry struggles despite Domo's rescue deal
Leuna/Magdeburg (dpa) – Just as a potential breakthrough emerges in the rescue of insolvent chemical company Domo in Leuna, the overall situation in eastern Germany's chemical industry remains tense. Despite isolated glimmers of hope, industry representatives continue to see a deep-seated structural crisis.
"Right now, we only know one direction: production, revenue, and employment are all declining," said Nora Schmidt-Kesseler, managing director of the North-East Chemical Industry Association (Nordostchemie), in a background briefing in Berlin. The sector is now in its third consecutive year of crisis.
Chemical Industry Well Below Normal Levels
According to the association, total revenue for the chemical and pharmaceutical industry in eastern Germany reached around €28.5 billion in 2025—a slight increase of 0.5 percent, driven solely by the pharmaceutical sector.
Traditional chemical production, however, saw a decline of roughly three percent. Capacity utilization remains particularly critical, averaging just 72 percent in the chemical industry.
The sector employs around 63,000 people, the association reports. While pharmaceuticals remain stable, the chemical industry is increasingly cutting jobs.
Structural Challenges Weigh on the Region
The industry cites high energy and raw material costs, mounting regulatory burdens, and intensifying international competition as the primary causes of the crisis. Geopolitical risks, such as the Middle East conflict, are adding further strain.
"Every day counts," Schmidt-Kesseler emphasized, pointing to recent geopolitical developments. Disrupted trade routes and rising energy prices—fueled by tensions around the Strait of Hormuz—are putting additional pressure on companies.
At the same time, she warned of growing dependence on imports. Already, roughly two-thirds of key chemical precursors and active ingredients come from Asia.
Domo Rescue Offers a Ray of Hope
Against this backdrop, the potential rescue of Domo in Leuna is seen as a crucial positive signal. The plan involves site operator InfraLeuna and Leuna-Harze jointly taking over the two insolvent subsidiaries.
"This is a very encouraging sign," said Schmidt-Kesseler. The solution could help stabilize the site, given Domo's deep integration into the chemical park's production network.
On Wednesday, Saxony-Anhalt's Minister-President Sven Schulze (CDU), the provisional insolvency administrator, and representatives of the chemical park will provide an update on the Domo situation.
Uncertainty Persists
Despite a few positive developments, the industry's outlook remains cautious. Only about ten percent of companies expect short-term improvements. Given the current uncertainties, the association refrains from making forecasts for the year ahead.
"We face an extremely challenging situation, partly driven by economic cycles—but only in part," Schmidt-Kesseler stressed. The core issue remains the sector's structural crisis.
Companies are already responding with cost cuts, reduced investment, and, in some cases, plant closures. The coming months will be decisive for the industry's future.
