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MOSCOW (MRC) -- Production of chemicals, including pharmaceuticals, will increase 1.5% in Germany in 2021, and sales generated by the German chemical-pharmaceutical industry will rise 2.5%, according to industry association VCI (Frankfurt), said Chemweek.
Demand for chemical products is largely stable at the end of 2020, it says. "Business sentiment is now confident in most of our companies,” says VCI president and Evonik Industries CEO Christian Kullmann. "More than half of them expect sales to go up next year both in Germany and abroad."
The industry in Germany has had a “difficult year” in 2020 due to COVID-19, VCI says. The period has been “characterized by marked ups and downs in the four quarters,” it says. Due to weaker demand, chemical production including pharmaceuticals has decreased by 3% overall in 2020, with all sectors recording losses, VCI says. The decline is in line with VCI’s latest forecast. Losses by sector ranged from a minor slip in the output of pharmaceuticals of 0.5% to a slump of 6.5% in polymers production. Total output of chemicals excluding pharmaceuticals has decreased 4% in Germany this year, VCI says.
VCI says that a “corona-related lack of orders” has caused sales by Germany's chemical-pharmaceutical industry to fall 6.0% in 2020, to EUR186.4 billion (USD227.4 billion), with domestic sales down 5.5% and export sales lower by 6.5%. A 2% fall in producer prices helped drive the decline. "The strain on our member companies is considerable," says Kullmann. "However, our industry as a whole has been hit less hard than other sectors of the economy."
VCI projects a slight drop in employment of 1% in Germany’s chemical industry in 2021, due to the “structural change in the industry which is being accelerated by the corona crisis.” Employment in the industry is currently stable at 464,000 compared with a year ago, “irrespective of the weak chemicals business," VCI says.
The latest VCI members’ survey shows that many chemical companies operating in Germany will need some time to overcome the crisis. Only 17% of member companies participating in the survey believe they will return to pre-crisis levels in 2020 and about 25% expect to be able to make up for the decline by the end of 2021. The largest number of businesses surveyed, 47%, think they will have overcome the crisis in 2022 at the earliest.
Kullmann, meanwhile, has called for the European Green Deal to be better balanced to maintain the competitiveness of European industry. "This is not only about driving forward environmental protection but also about economic growth and social aspects as the necessary three pillars,” he says. “We need to spur innovation and investment, otherwise Europe will not be able to hold its own in a changing world order."
The recent tightening of the EU emission-cut target from 40% to 55%, “must come with flanking measures to ensure that energy-intensive products can continue to be manufactured competitively in Europe,” Kullmann says. VCI warns against the introduction of climate tariffs by the European Commission for imports of CO2-intensive basic materials into the EU. “Apart from a lack of controllability and trade conflicts, there is also a risk of a loss in competitiveness at downstream stages of value chains,” Kullmann says. “Only more complex compensation models can be helpful to the chemical industry in Europe. Above all, climate tariffs cannot substitute existing compensation measures for rising climate protection costs of European companies."
Establishing a global price for CO2 would create more of a level playing field, VCI says. The outcome of the US presidential election, China's new climate ambitions, and the commitment of Canada to climate neutrality by 2050 increase the chances of reaching this goal, it says. “A door has opened to advance climate protection jointly, globally, and with agreed rules in a political setting,” says Kullmann. “This opportunity must not be missed."
Kullmann also calls for a resumption of talks with the Biden administration on transatlantic free trade. "It is not necessarily an all-encompassing TTIP 2.0,” he says. “But talks between the EU and the US on a free trade agreement for industrial goods are in the best interests of both partners."
We remind that Russia's output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.
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