German chemical industry in decline

In Frankfurt, VCI President Markus Steilemann said sales will “probably” decline as well. The association did not make any concrete predictions. He warned against chemical companies moving abroad due to high gas and electricity prices in Germany.

“The profitability of the entire industry deteriorated rapidly during the year,” Steilemann said. In the German industrial sector, the third largest after automobile and mechanical engineering, the 2023 signs are extremely bad. Every fourth industry company is making a loss. Medium-sized companies are particularly affected. Short-term work will also be a problem again in the spring, Steilemann said.

He warned against the exit of chemical companies, especially to the world’s largest chemical markets, China and the USA. Energy is cheaper there than in Germany. Many industrial companies wanted to invest less, and if they did, especially outside of Germany, he said. Almost one in four companies moves some of their production abroad, according to a VCI member survey

The chemical and pharmaceutical industry, which employs 475,000, suffers from high gas and electricity prices resulting from the Ukraine war. According to VCI, production will decrease by 6 percent this year compared to the previous year.

While the pharmaceutical industry has grown, only chemical production has shrunk by around 10 percent. “A similarly strong decline in production was last experienced as a result of the global economic crisis in 2009.” The production of ammonia used in the fertilizer and pharmaceutical industries decreased by 75 percent.

Meanwhile, industry turnover is expected to increase by a good 17 percent to a record level of €266.5 billion and therefore stronger than previously targeted. According to VCI, the reason for the increase is the 22 percent price increase in chemical products. Price-adjusted sales fell five percent, and sales volumes fell as well.

(SDA)