German Chemical Industry Faces Cold Winter: Exports Plunge Nearly 4%, Demand from China and Europe Slumps, Future Prospects Look Grim!

The German Chemical Industry Association (hereinafter referred to as VCI) solemnly pointed out that its member companies in the first half of this year, export sales showed a significant decline. VCI blamed high domestic production costs and weak industrial demand in China, Europe and the United States. Sales in the European Union and North America declined by 3.7% and 3.9%, respectively.

The German chemical industry has been looking to overseas sales as an important way to strengthen its financial position after a period of challenges from persistently low domestic demand. "In addition to the unsatisfactory performance of the domestic business, the export business is also facing adversity," Henrik Meincke, VCI's chief economist, said in the press release. "The expected economic recovery seems at risk of running out of steam."

However, VCI also pointed out that despite the overall weakness of the chemicals market, German pharmaceutical exports showed growth in key markets in Asia and the United States, and sales to the North American market increased by more than 13%. The group expects pharmaceutical exports to continue to grow.

Information and Forschung, the German economic research institute, is relatively optimistic about the future prospects of German chemical companies. The institute surveyed chemical industry executives in August and the results showed that most expected their exports to remain stable in the near term.

At the same time, BASF, Germany's largest chemical manufacturer, announced plans to stop production of nylon proadipic acid, cyclododecanone and the intermediate cyclopentanone in Ludwigshafen, Germany, next year. The company said the decision was made to "ensure competitiveness in the face of changing market conditions." Basf will continue to produce adipic acid in France and South Korea.

There was also potentially bad news from Volkswagen, a major customer of the German chemical industry. The company is considering closing its plant in Germany for the first time in its 87-year history because of weaker-than-expected demand for electric vehicles in Europe. The company revealed in June 2023 that it planned to cut $11 billion in costs by 2026.