Chemical sector halts downturn - no turnaround
Despite falling prices, German chemical companies also achieved significantly lower sales in the summer. However, the fact that production is at least stagnating is a glimmer of hope. The industry, which is also an economic indicator, believes it has bottomed out.
The ailing German chemical industry stopped its downward slide in the summer. Incoming orders have also stabilized. However, this is not yet a turnaround, according to the German Chemical Industry Association (VCI). "The German chemical industry is treading water and hopes of an improvement by the end of the year are fading," said VCI President Markus Steilemann. "High energy and raw material prices and the lack of orders will continue to weigh on business." Industry companies are therefore being forced to cut costs.
For the first time in a year and a half, the chemical and pharmaceutical industry recorded a slight increase in production of 0.1 percent in the third quarter compared to the previous quarter, the VCI continued. Excluding the pharmaceutical business, there was even growth of 1.7 percent. Compared to the same period last year, however, production was still down by 6.1 percent. "The bottom seems to have been reached."
VCI: Electricity price package will not be enough
The chemical and pharmaceutical industry, with around 477,000 employees in Germany, is a supplier to the automotive, consumer goods and construction industries, for example, and is therefore dependent on the economy. Conversely, the industry's business is an indicator for the economy as a whole. The energy-intensive chemical industry in particular has experienced difficult times due to the economic downturn and increased energy prices in the wake of the war in Ukraine. Industry leader BASF, for example, announced thousands of job cuts and the closure of energy-intensive plants at its main site in Ludwigshafen.
The German government's electricity price package will not be enough to raise the international competitiveness of companies to a new level, criticized Steilemann. In recent months, the VCI had vehemently advocated a broad state-subsidized industrial electricity price for energy-intensive companies, as called for by Federal Minister of Economics Robert Habeck. Instead, the German government recently agreed on a reduced electricity price for industry, which will also benefit SMEs.
Meanwhile, turnover in the chemical and pharmaceutical industry in the third quarter was 13.8 percent below the previous year's level. Prices fell by 5.5 percent. For the current year as a whole, the VCI continues to expect a decline in production of eight percent. With prices falling, industry turnover is expected to be 14% lower. Business is also likely to remain difficult in winter, according to the association. "The companies are now hoping for an improvement in the coming year."
The economic situation in the chemical industry has been challenging, with lower sales and increased costs. Despite a slight increase in production in the third quarter, the industry is still grappling with high energy and raw material prices and a lack of orders.
The economic indicator that is the chemical industry is heavily reliant on the overall economy, including sectors such as automotive, consumer goods, and construction. The industry's business also indicates the health of the economy as a whole, facing difficulties due to the economic downturn and increased energy prices.
Source: www.ntv.de
