Across the entire spectrum, VCI managing director Wolfgang Große Entrup said full-year production tapered off by 0.8% year-on-year, with chemicals dipping 1%, and drugs held nearly steady at 0.2%. Broken down, inorganic chemicals and polymers saw output declines of 4.1% and 3.1% respectively, while fine and specialty chemicals slipped back 2.1%. Output of consumer chemicals slowed by 1.8% as demand for hygiene products could not compensate for the lack of interest in cosmetics. On the upside, petrochemicals output rose 1.4%.

Full-year sales of chemicals and pharmaceuticals sank by €4.4% to € 189.6 billion as domestic sales gave way by 2.3%, while revenue from outside Germany pointed downward by 5.6%. Producer selling prices deteriorated by 1.8%, despite an upswing in the second half year.

Fourth quarter performance saves the day

The industry’s performance in the fourth quarter was far brighter, a development that Große Entrup attributed in major part to a rebound in non-EU markets, especially the US, where business picked up notably after an earlier end to lockdowns. China, first to be hit by the coronavirus crisis, rebounded even faster. In fact, the People’s Republic was the only world economy to see any growth at all in 2020, VCI’s MD noted.

Both the US and China are now among the main pillars of German chemical producers’ business growth. Currently, around half of the industry’s capital spending budget goes to US projects.

Across Germany, chemical production grew by 7.4% in Q4 against Q3, and in contrast to the full year figures, chemicals output with an upswing of 9.2% exceeded that of pharmaceuticals. At 85%, capacity utilization figures were robust. Sales picked up 8.1% against the preceding quarter, with the dynamic coming from customers both at home and abroad, and selling prices nudged up by 0.4%. All production segments saw improvement, thanks in major part to the need to reorder after prolonged shutdowns.

VCI is not convinced that the dynamics of Q4 2020 can be repeated in 2021, though the association’s preliminary forecast assumes a rise of 3% in production, a 5% increase in annual sales to just under €200 billion and a 2% improvement in producer selling prices. Producers worry especially about the effects of the pandemic on the supply chain.

Production glitches and repeated forces majeure, widespread both in the EU and overseas are already taking their toll, and shortages of freight containers, plus high transport problems have led to led to longer delivery times, while reinstated border checks aimed at keeping virus mutants out are adding to the burden.

The lockdown-related absence of in-person conferences, visits to customers and less cooperation between companies are also taking their toll. German chemical companies are somewhat encouraged, however, by the improving situation in the US.  President Joe Biden’s $1.9 trillion stimulus package will put more money in people’s pockets and, as Große Entrup remarked, Americans usually pump more money into consumption than Europeans do.

Author: Dede Williams, Freelance Journalist