German rubber industry to return to double-digit growth in 2021

Frankfurt, Germany – The German rubber industry is set to recover from the impact of the Covid crisis in 2021, with the ‘catch-up process’ expected to begin ‘at the latest in the third quarter,’ the WDK said in its new annual report

However, the industry association’s forecast of double-digit sales growth was accompanied by warnings that ‘turbulent raw material markets’ and ‘fragile logistical supply chains’ could threaten recovery. 

“Prices are rising rapidly on the raw material and logistics markets,” said WDK, explaining that the demand-driven market is currently seeing price hikes due to limits on availability and supply.

And, said the report issued 24 Feb, for certain materials, quantities in excess of previous orders are often only available with long delivery times of up to six months. 

In addition, the association noted  “an alarming number” of force majeure reports for petrochemical raw materials and other primary materials. 

Similarly, the freight sector is being hit by significant price increases and a lack of container capacities, according to the association..

In 2020, Germany’s rubber industry was hit hard by the Covid pandemic, largely due to its strong links with the automotive industry, WDK noted. 

Total industry sales fell 14.5% year-on-year to €9.37 billion, reflecting double-digit declines both in the tire and rubber goods segments.

Germany’s tire industry saw revenues decline by 18.8% year-on-year to €3.6 billion, while the GRG sales fell 11.5% to just under €5.7 billion, according to WDK’s analysis. 

Production decreased by over 18% to 1.25 million tonnes, including a 25% decline in tire production and 11.5% drop in rubber goods output.

Employment across the German rubber industry was down 4.5% to 70,000 people, as both segments saw significant job cuts.

"The companies had to react to the weak demand and adjust their capacities despite the state aid," explained Michael Berthel, chief economist at the WDK.

The declines in domestic production and employment, warned Berthel, may not be compensated for even after Covid, due to recent national regulations.

Such regulations, he said, include the ‘fuel emissions trading act’ and ‘planned projects association sanctions act’, which intends to combat corporate-crime and tax-evasion.