The German chemical industry is facing a bleaker outlook

The German Chemical Industry Association (VCI) said in its third-quarter industry report on the 14th that compared with the previous quarter, the output of the German chemical industry in the third quarter of this year fell by 4.2%, and the capacity utilization rate was 79.3%, which was significantly lower than the normal level.

The report showed that the total turnover of the German chemical and pharmaceutical industry in the third quarter fell by 1.6% month-on-month to 63.1 billion euros due to lower sales due to sharp production cuts, price cuts and weak demand.

The report notes that the German chemical and pharmaceutical industry continues to be affected by the energy crisis, especially in the summer, and the situation has further worsened. Production in the sector has been slashed, affecting almost all sub-sectors, with production stagnating at some plants and below-normal capacity utilization in the industry.

At the same time, it is increasingly difficult for German chemical companies to pass on the sharply rising energy costs in the value chain to downstream users. The industry's turnover declined for the first time in two years, with domestic sales particularly evident. A weak global economy and weak industrial activity in Germany led to a decline in demand for chemical products.

The data shows that despite the sharp rise in energy costs, producer prices rose by only 2.6% in the third quarter. This means that chemical prices are 23.7% more expensive than in the previous year.

Markus Steilemann, president of the German Chemical Industry Association, said the chemical industry was facing a bleaker outlook. Due to the significant increase in energy costs, production in Germany is already in an extremely serious situation for many companies. In particular, SMEs have considerable problems in concluding follow-up contracts or new contracts after the expiration of electricity or gas supply contracts. The situation will worsen with the onset of winter and the decline in natural gas storage.

Given the continuing difficult situation in the sector, VCI maintains its forecast for a 5.5% decline in production for the full year 2022, with chemical production (excluding pharmaceuticals) expected to decline by 8.5%.