VINACHEM

Germany’s chemicals industry recorded a 7.2% drop in production in the third quarter, according to the country’s trade body VCI on Monday.

In the face of challenging circumstances, the VCI held its forecast at an 8.5% drop in production for the chemicals sector in 2022, as producers were hit with higher prices from the energy prices and struggled to pass these downstream.

Declines were less pronounced when including data from the pharmaceuticals sector, with a 4.2% drop in third quarter production, and a forecast full-year reduction in output of 5.5%.

Capacity utilisation rates for the chemicals and pharmaceuticals industry fell the three-month period to settle below normal levels at 79.3%.

Despite the spike in input costs, producer prices increased by 2.6%, meaning that chemicals were 23.7% more expensive than in the previous year.

Turnover fell for the first time in two years, with a particular decline noted in domestic sales, as global macroeconomic sentiment deteriorated, leaving weakening demand impacting industries across Germany. This led to a 1.6% drop in sales for the third quarter, to €63.1bn.

The situation does not appear to be remedied in the fourth quarter, as some European producers have found the current climate cost prohibitive to keep running and may not come back on stream until 2023.

“More dark months are ahead for the chemical industry…In particular, small and medium-sized enterprises with expiring supply agreements for electricity or gas are having great problems in concluding follow-up or new contracts,” said VCI President Markus Steilemann.

“Matters will become yet more difficult with the onset of winter and falling gas storage levels. Therefore, we now need fast and unbureaucratic energy price brakes with a broad effect, so that things do not get even worse.”  - ICIS-