VCI: German chemical production will still decline in 2023

Recently, the German Chemical Industry Association (VCI) stated that based on current external conditions, it is expected that German chemical production (excluding pharmaceuticals) will decrease by about 8% compared with 2022, and that German chemical and pharmaceutical production will decrease by about 5.0% in 2023, while Sales will fall nearly 7.0%.

VCI said that the sharp decline in energy and raw material prices in recent months may stabilize in the first quarter of 2023, but inflation is expected to persist for several years, the global economic weakness will continue, and the energy crisis in Germany and Europe remains unresolved , and Germany faces other problems. Untrup said that Germany needs to restart its industrial policy, achieve the highest level of performance in terms of energy, infrastructure, skilled labor, digitalization, etc., establish efficient and well-performing public management, help German chemical industry cope with environmental changes, and Securing the supply of innovative and sustainable materials for the industry.

VCI pointed out that Germany must vigorously promote the expansion of renewable energy, grid infrastructure and storage systems, and at the same time need to formulate industrial electricity prices in order to pave the way for the transformation of the chemical industry. Also, Europe should have better governance and prioritization instead of excessive use of bans or stricter restrictions and regulations in planning, investment and laws to create uncertainty, the focus must be on sustainable growth. The VCI said: "From the Carbon Border Adjustment Mechanism (CBAM) to the Supply Chain Act and Ecodesign, many regulations are an affront to our trading partners. This makes European imports more expensive and cuts off our supply of raw materials. In our view , preferably under a free trade agreement with trading partners to agree on common trade rules.”

Previously, data released by the VCI showed that in the fourth quarter of 2022, German chemical production (excluding pharmaceuticals) fell by 11.6% from the previous quarter and 23.6% from the same period last year. Chemical and pharmaceutical production decreased by 5.0% month-on-month and 14.0% year-on-year. The chemical industry's capacity utilization rate fell to 76.5%, compared to 79.3% in the third quarter of 2022. Sales of the German chemical and pharmaceutical industry in the fourth quarter fell by 3.7% to 59.2 billion euros, but increased by 4.9% compared with the fourth quarter of 2021. For the full year 2022, chemical production excluding pharmaceuticals will drop by 11.9%, and chemical and pharmaceutical production will drop by 6.6%. Chemical and pharmaceutical sales increased by 16.6%, approximately 265 billion euros, and producer prices rose by 21.7%.