Germany: Industry Insight German Chemical Industry: Production Rose 7.4 % Compared to Previous Quarter

Editor: Ahlam Rais

The German chemical industry recorded a strong final quarter with sector sales up 8.1 % overall. The German Chemical Industry Association (VCI) expects chemical production to grow by 3 % for 2021.

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VCI report on the economic situation of the chemical industry in the 4th quarter of 2020.
VCI report on the economic situation of the chemical industry in the 4th quarter of 2020.
(Source: Deposit Photos)

Frankfurt am Main/Germany – The German chemical and pharmaceutical industry ended the Corona Year 2020 with a positive fourth quarter. This is according to the latest quarterly report published by the German Chemical Industry Association (VCI). According to the report, Germany's third-largest industrial sector achieved a substantial increase in production and sales than the previous quarter. The recovery of the last months even accelerated, but in the end, it was not enough to turn the 2020 annual balance sheet into a positive overall. The strong final quarter was triggered by rising demand for chemical products in Germany and abroad. The recovery among industrial chemical customers continued dynamically across all continents. They ordered large quantities of chemicals - also to fill their emptied warehouses.

However, due to the increasingly prolonged lockdown, the outlook for the near future among chemical companies was clouded in some cases. According to a VCI member survey, almost every second company expects a damper in the first quarter. For some companies, this is compounded by material shortages and logistics problems. Commenting on the situation in the sector, VCI Managing Director Wolfgang Große Entrup says: "If the industrial economy continues to develop positively over the year, it will be a good sign for the chemical industry. However, stronger fluctuations in demand are possible."

Development of production in individual chemical sectors
Development of production in individual chemical sectors
(Source: Destatis, VCI)

Forecast

For 2021, the VCI now expects chemical production to grow by 3 per cent. Prices are expected to rise 2 per cent, allowing industry sales to increase by 5 per cent to just under 239 billion dollars (200 billion euros).

Production

Chemical production rose 7.4 per cent quarter-on-quarter from October to December 2020. Year-on-year, production increased by 4 per cent. Capacity utilization in the sector improved from 81.6 per cent to 85 per cent.

Producer prices

Chemical prices continued their recovery in the fourth quarter. Chemical products cost 0.4 per cent more than in the previous quarter. However, they were still 1.7 per cent cheaper than a year earlier.

Sales

The development in production and prices also led to rising sales. From October to December 2020, sector sales improved by 8.1 per cent compared with the previous quarter to 56 billion dollars (47 billion euros). However, it was still 0.6 per cent lower year-on-year.

Employment

The number of jobs in the chemical-pharmaceutical industry remained stable in the fourth quarter. Despite the Corona crisis and increased uncertainties, chemical companies were able to maintain their workforce throughout 2020. They currently employ 464,000 people.

The VCI represents the economic policy interests of more than 1,700 German chemical and pharmaceutical companies and German subsidiaries of foreign groups vis-à-vis politicians, authorities, other sectors of industry, academia, and the media. In 2020, the industry turned over nearly 227 billion dollars (190 billion euros) and employed around 464,000 people.

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