German Chemical Industry Cautiously Optimistic

Contrasting with CEFIC’s forecast for Europe as a whole, the German chemical industry has a slightly more upbeat note on the business outlook for 2016.

Thanks to the economic stabilization of Europe, the robust upward trend in the US and the consistent demand in Asia, the industry association Verband der Chemischen Industrie (VCI) said it expects output to increase by around 1.5% next year, with sales rising by the same margin to €193.6 billion. Sales to international customers will be the driving force.

While VCI said most industry segments are expected to see an upswing as falling oil prices ease the burden of competing with US companies benefiting from cheap shale gas feedstock. However, increasing imports will exert pressure.

With 2015 nearly over, German chemical producers reported sales were flat at the 2014 level of €190.8 billion, despite a 1% rise in production and due in part to a price decline of 2.5%. Reflecting price effects, domestic sales sank by 1.5% to €74.6 billion. Sales to foreign customers rose 1% to €116.5 billion.

Speaking at a press conference in Frankfurt, VCI president, Marijn Dekkers – CEO of Bayer –said business within Europe did not fulfill all of producers’ expectations this year. As sales to the EU 15 sank by 1.5%, revenues from trade with the NAFTA region widened by 13%, with demand for pharmaceuticals encouraging. Business with Asia improved by 5% and with Latin America by 3.5%.

On the whole, Dekkers said, the world economy did not provide any positive impetus for chemical business this year. Demand from emerging markets did not live up to expectations, with Russia and Brazil in recession and the motor of Chinese growth sputtering badly.