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VCI forecasts decline in Germany's chemicals output, sales in 2020

September 09/2020

MOSCOW (MRC) -- Germany’s chemical industry association VCI (Frankfurt) says it expects the country’s production of chemicals and pharmaceuticals to fall by 3% in 2020 compared to the prior year, with annual sales to decline by 6% year on year (YOY). A return to pre-COVID-19 levels is not expected before the end of 2021 at the earliest, it says, said Chemweek.

Initial signs of a recovery are, however, now being seen, says Christian Kullmann, VCI president and chairman of Evonik Industries. “If another shutdown can be avoided, demand for chemicals and pharmaceuticals is expected to stabilize in the second half of the year," he says.

Production by Germany’s chemical and pharmaceutical industry fell by 2.5% YOY in the first six months of this year, while sales shrank by 6.1% YOY to EUR96 billion (USD113 billion). Excluding pharmaceuticals, chemicals output fell by 3.6% in the first half of the year, compared to the equivalent period last year.

After a positive start to 2020, production in the second quarter fell by 5.8% compared to the prior-year quarter, with average plant capacity utilization falling to 77.5%, according to the VCI. All product areas in the chemicals and pharmaceuticals sector were affected by weak demand both domestically and internationally, with production of specialty chemicals falling by 3.9% in the first six months of the year compared to 2019, it says. Polymers production declined by 8% YOY due to the slump in demand from the automotive industry and plastics processors, it says. Production of pharmaceuticals recorded only a slight fall of 0.3% over the same period, while the decline in soaps and detergents output was 0.7%.

"For one in four companies, the lack of orders continues to have a major impact on business activities,” the VCI says. The chemical and pharmaceutical sector “bottomed out” in the second quarter, with a survey of the VCI’s members showing that disruptions to operations are decreasing, it says. Overcoming the COVID-19 crisis “will take some time,” it adds, with 49% of its member companies expecting the industry to return to pre-pandemic levels by the end of next year. About 20% of those surveyed expect it to take a further year, with 13% expecting only to be able to compensate for the decline at a later date or not at all, it notes.

Acknowledging the “rapid and consistent action” of Germany’s federal government during the crisis, Kullman says it is now important to look ahead. “The emergency aid was right and indispensable, but they will not secure the future of Germany,” he says. A stimulus package must be followed by a political program that provides sustainable growth opportunities and which makes Germany attractive once again for large-scale industrial projects “so that investment and innovation can be mobilized,” he says. He urged the government to take measures including reducing corporation tax to 25%, cutting green energy costs, streamlining planning and approval procedures, and establishing an investment program for climate protection and the circular economy.

As MRC informed earlier, Russia's output of chemical products rose by 4.4% year on year in May 2020 . Thus, production of basic chemicals increased year on year by 5.4% in the first five months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-May. Production of benzene was 110,000 tonnes in May 2020, which equalled the figure a month earlier. Overall output of this product reached 615,000 tonnes over the stated period, up by 1.7% year on year.
Author:Anna Larionova
Tags:petroleum products, petrochemistry.
Category:General News
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