VCI calls for ‘economy first’ policy as German chemicals industry reports “severe setback”

Frankfurt, Germany – German Chemical Industry Association (VCI) has called on the new federal government to prioritise economy and competitiveness in its policy making, as the industry ended 2024 with a “severe setback”.

In the final quarter of last year, production fell sharply by 4.2% quarter-on-quarter and 1.2% year-on-year, VCI reported 12 March.

All sectors except for detergents and personal care products reported a decline in production during the quarter, with petrochemicals and polymers seeing particularly sharp drops, the association said.

Pharmaceutical production, on the other hand, was “somewhat encouraging” with a decline in production apparently “coming to an end”.

The capacity utilisation rate remained “below the break-even point” at 74.7%, down from 74.8% the previous quarter, VCI reported 12 March.

Total sales in the chemical and pharmaceutical industry increased slightly compared to the previous quarter to €53.1 billion, but were down 1.5% compared to the final quarter of 2023.

Business in the German chemical & pharmaceutical industry was particularly sluggish domestically, especially at the end of the year.

Domestic sales fell by 1.4% sequentially to €19.5 billion, down 4% compared to the final quarter of 2023.

The declines were offset by foreign sales which rose 1.4% quarter-on-quarter to €33.6 billion.

Important drivers, VCI said, were the non-European markets with growth particularly strong in North America at the end of the year.

Commenting on the results, VCI managing director Wolfgang Grosse sounded the alarm for the industry, saying the global chemical markets were recovering ‘without Europe’.

Production, he said, has hit a new low while producer prices stagnate, and the domestic business is ‘in red’.

The year 2024, Grosse said, "was another year to forget for the industry.”

“We want to put this low point behind us, even if Trump's unpredictable tariff policy, renewed energy price increases, and unresolved structural problems continue to cause uncertainty,” the VCI leader said.

To achieve that, Grosse said Germany needed a “radical economic policy correction” putting “economy first” at the core of strategising.