Chemical Industry Europe's Big Chemical Companies Hold Their Own Despite Crisis

Editor: Dominik Stephan

In spite of debt and banking crisis in the European Union, the chemical industry in major European markets defies the trend: As the German Industry Association VCI stated, the chemical business bets on domestic markets...

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Chemistry: Sailing against the wind
Chemistry: Sailing against the wind
(Picture: Evonik)

The tremors have reached the core markets of the old continent: Impacts of the debt and banking crisis in the European Union and the recession in Southern Europe are now felt by the chemical industry in Germany too. In the 1st half 2012, chemical production was roughly 4 percent below the level of the previous year, the VCI, the Frankfurt-based association of the German chemical industry, states.

Especially the prices for feedstock affected the figures: Sales fell only slightly, because higher raw material costs led to a price increase by ca. 3 percent during the same period. The VCI’s president Dr Klaus Engel states: “Our industry has held its own in a difficult economic environment. The product portfolio of the German chemical industry is of high quality and innovative; our industry is competitive and can weather a crisis. Therefore, we can rely on our strengths also in less favourable conditions.”


Forecasts Clouded but With Positive Short Time Development

The sentiment in Germany’s third largest industry is much less optimistic than it was in early 2012: Companies worry more and more about about their European business. The VCI nevertheless assumes that production 2012 will return the high level of 2011 in the further course of the present year. For 2012 as a whole, the association is expecting chemical industry sales to increase by 2 percent.

Engel on the 2nd half 2012: “Firstly, our hopes are based on the domestic business. German industry, which is by far the largest customer of our companies, will continue to expand production also in 2012. Secondly, the demand for chemicals is still growing in foreign overseas markets.”

Chemical Industry Expects Investment and Employment Figures to Grow

Irrespective of the most recent dampening of the economy, chemical companies continue to be positive about their medium and long-term business prospects. This is shown by the strong development of two major indicators: According to the IFO investment test, 83 percent of chemical companies are planning to increase their investment activities in 2012.... more on page 2!

Largely, these investments will go into capacity expansions. The VCI’s president emphasizes: „We assume that this year our industry will invest some 6.7 billion euros in Germany, i.e. 300 million euros or 5 percent more than back in 2011.”The increase in employment, too, shows that the companies are positive about their long-term perspectives. In the 1st half 2012, the number of jobs in the German chemical industry rose by 2.0 percent to currently around 437,000 staff.

Chemical Sales Fell Slightly, Despite Good Domestic Figures

Irrespective of price increases, total sales of the German chemical industry in the 1st half 2012 fell by 0.5 percent and totalled 89.2 billion euros. Because of the good economic situation of industry, business with domestic customers improved by 0.5 percent to 35.5 billion euros. The recession in countries of Southern Europe adversely affected foreign business, which dropped by 1.0 percent to a volume of only 53.7 billion euros.

Rising raw material costs forced many companies to raise the prices of their products. All in all, in the 1st half 2012 chemical-pharmaceutical products were some 3 percent costlier than they had been one year earlier.

Imports and Exports Profit from Asia and Latin America

From January to June 2012, exports – this term includes foreign sales of chemical companies, re-exports and exports of chemicals by other industries – increased by 1 percent to 77.2 billion euros, states the VCI. But this time, growth came solely from Asia, South America and the USA.

With the lastingly good situation of industry in Germany, imports of chemical products increased too. In the 1st half 2012, they were worth 54.1 billion euros and thus 2 percent higher than in the relevant period of 2011.

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