German chemical makers halt production slide at Q3 stage
VCI: Down-trend 'appears to have reached the bottom of the curve' but cost and market pressures persist
Frankfurt – The German chemicals industry association (VCI) has maintained its full year output forecast for 2023, expecting production to fall 8% year-on-year, or 11% excluding pharmaceuticals.
Industry revenue for the full-year, said VCI in a report issued 14 Nov, is expected to fall by 14% compared to 2022 – a year in which sales rose 17% to €266.5 billion on higher selling prices.
According to VCI, the industry sector recorded a marginal 0.1% increase in production in the third quarter of 2023, halting a declining trend over the previous five quarters.
However, compared to the third quarter of 2022, production was down 6.1% as capacity utilisation fell to reach 75.7%.
Producer prices were 5.5% lower year-on-year, while sales volumes fell by 0.3%, “seasonally adjusted” to a total of €54.8 billion.
“Although the bottom appears to have been reached, there is still no sign of a trend reversal,” commented VCI, noting that production levels remained at “a low point”.
Furthermore, the association said that both local and overseas customers were ‘holding off’ buying, adding that “companies simply lack orders”.
“The German chemical industry is stagnating and hopes of an improvement at the end of the year are dwindling,” said VCI president Markus Steilmann.
High energy and raw material prices combined with lack of orders will continue to “put a strain on business,” added the Covestro CEO.
As a result, Steilmann said companies are being forced to curb costs: closing production facilities, exiting individual business areas or shifting investments abroad.
Steilmann went on to say that the energy-intensive industry was “still missing real relief” for energy prices.
The federal government's electricity price package, he added, “will not be enough to raise the international competitiveness of our companies to a new level.”