(CHEManager International 7-8/2014)     Production trend      Things are moving upward for the German chemical industry, according to the German chemical industry association (Verband der Chemischen Industrie, VCI). The production of chemicals and pharmaceuticals in Germany went up by 3% against the 1st half 2013 and is at the level it was before the 2008/2009 global crisis (Fig. 1). However, excluding pharmaceuticals the production only increased by 1.5%. The capacity utilization of production plants reached a good level of 85%, up from about 84% a year ago. For the full year 2014, the VCI maintains its forecast of a 2% increase in chemical production (1% excluding pharma).



Forecast for key indiactors     With a clearly higher production volume, German chemical industry sales expanded from January to June 2014 irrespective of falling prices (-2%). Total sales amounted to €98 billion and were 2% higher than in the 1st half 2013. For the overall year 2014, the VCI expects sales to improve by 1.5% to ca. €193 billion due to slightly falling prices (-0.5%). The association that represents some 1,650 German chemical companies and German subsidiaries of foreign businesses - about 96% of them are small and medium-sized enterprises (SME) - expects the employment in the sector to increase slightly by 0.5% from currently 440,000 staff.

Foreign trade     The German chemical industry has been recording export surpluses for many years. In 2013, exports climbed by 2% to €165 billion. Imports of chemical products stagnated at €111 billion. In H1 of 2014, imports of chemicals into Germany rose by 4%, whereas foreign sales went up only slightly by 1% to €58 billion. Domestic sales increased dynamically; they added up to €40 billion and were 3.5% above the level of the previous year. The rising domestic demand brings full order books. According to the VCI, the recovery of the business is also driven by the demand from the USA and Eastern Europe. By contrast, there were hardly any growth impulses from Asia and Latin America (fig. 3).

Regional breakdown      According to the VCI, business is also picking up in the EU. Orders for chemicals were back on the increase from the EU neighboring countries, too, which purchase 35% of Germany‘s chemicals output. Further impulses for the economy - in the chemical industry and beyond - could result from a free trade agreement with the USA (TTIP) currently under discussion in Europe. According to the VCI's own calculations, the chemical industry in Germany would benefit from TTIP. Currently, 6% of the country's chemicals exports are shipped to the USA (fig. 4) and the chemical industry expects impulses from tariff reductions, amongst other effects. Read more about TTIP on page 7 of this issue.