German chemicals sector facing ‘difficult quarter’ following Q3 recovery

Frankfurt – The German chemicals-pharmaceutical industry saw a recovery from Covid-19 downturn in the third quarter, but the “crisis is far from over,” according to the German chemicals industry association VCI.

Production in Germany's third largest industry increased 1.9% quarter-on-quarter, while sales rose 2.8% sequentially, said the association in an 11 Nov report.

All indicators, however, were significantly lower than in the previous year, according to VCI.

With the arrival of a second wave of the pandemic across Europe and health measures taken in the region, VCI said business prospects for chemical companies was becoming “clouded over again.”

"After the current recovery, the chemical industry is facing a difficult last quarter 2020,” said VCI president Christian Kullmann

Despite a strong “upswing”, Kullmann said fears of Covid was dampening business environment.

Against this backdrop, VCI said it expected a 3.0% drop in production in the chemical-pharmaceutical industry for the full year. 

With prices falling at a rate of 2%, sales are likely to decline by 6.0% to €186.4 billion, VCI added.

During the three months to end of September, Germany’s chemical production including pharmaceuticals rose by just under 2% quarter-on-quarter. Capacity utilisation of plants climbed from 77.5% to 81.6% during the period.

Despite low oil prices and weak demand, prices increased by 0.5% compared to the prior quarter, while sales jumped 2.8% to €43.8 billion sequentially. 

VCI linked the “growth impetus” to a 3.5% rise in domestic demand. Sales to customers abroad grew by 2.5%.