German chemicals makers’ ‘confidence fading’ after H1 decline
17 Aug 2023
VCI expects production to decline by 11% and industry sales to shrink by 14% in 2023
Frankfurt, Germany – German chemicals industry production fell 10.5% year-on-year in the first six months of 2023, or by 16.5% excluding data from the pharmaceuticals sector, Verband der Chemischen Industrie (VCI) has reported.
Output of inorganic basic chemicals was around 26% down on the prior-year first half, while the petrochemicals and polymers sectors registered declines of 21% and 19% respectively.
Amid dwindling orders, the chemical-pharmaceutical industry’s sales declined significantly both in Germany and abroad, the industry association also noted.
At €114 billion, first-half proceeds in the industrial sector were 11.5% below the prior-year level: domestic sales down 15.5%, foreign business 8.5% lower.
Meanwhile, a survey of VCI member companies found that almost two thirds of respondents reported falling profits or losses at their businesses.
High price-pressure contributed to a poor earnings situation, as chemical prices came under pressure irrespective of high production costs, said VCI.
For 2023 as a whole, VCI now expects production of chemicals (excluding pharma) to decline by 11% and industry sales to shrink by 14% – export business down by 12%, domestic sales by 17%.
But, rather than economic weakness, fading confidence in Germany as a business location is the major problem, according to VCI president Markus Steilemann.
The “compounded risk of high energy prices and company taxes, poor infrastructure, skills shortages, insufficient progress in digitalisation and bureaucracy madness is destroying the faith of our entrepreneurs,” said Steilemann.
“Structural deficits in Germany are another cause for concern,” said the VCI leader, noting that almost 90% of member companies rate energy costs as “bad or very bad in an international comparison.”
Continued Steilemann: “For this reason, we are fighting for an industrial electricity price as a bridge to the future – until we have enough energy from renewables. Only then can we hold our own in international competition.”
Warning of a knock-on effect if the chemicals industry were “first to wobble”, Steilemann said: “If we are doing badly at the beginning of the value-chain, others will follow soon...
“High-tech chemicals from Germany are enablers, for example, for battery technology and also for chips and semiconductors and the energy and mobility transition.”
