The business situation of the German chemical industry in the 3rd quarter 2008

Clearly weaker business situation of the chemical industry

In the 3rd quarter 2008 chemical companies in Germany had to considerably reduce production, due to the weak demand. But also from July to September production capacity utilization remained relatively high, averaging 84 percent.

Professor Dr. Ulrich Lehner, President of VCI, comments developments: "The worldwide weakening of the economy has now reached the chemical industry in Germany. Impacts of the global financial crisis intensify the negative effects on important customers of the chemical industry, at home and abroad. Now the state should intervene in a stabilizing role, by easing existing burdens and preventing new ones: We speak against auctioning costs in emissions trading, and we advocate state promotion for research projects as well as the reintro­duction of degressive depreciation of investments, at least for a limited period of time."

VCI believes that a further weakening in the demand for chemicals is very likely in the next few months. Consequently, VCI is expecting for the overall year 2008 a production increase by only 1 percent, against an increase by 5 percent back in 2007. With rising consumer prices, chemical industry sales should climb by ca. 3 percent in 2008.

Reduced production: In the 3rd quarter 2008 the chemical output fell by 1 percent, compared with the period from April to June. In a comparison with the relevant quarter 2007, the production level dropped by 1 percent, too.

Clearly higher producer prices: In the period under review, producer prices in the chemical industry became more even dynamic, due to strongly rising energy and raw material costs. Many companies increased chemicals prices noticeably. Altogether, chemical products were, on average, well over 4 percent costlier than in the previous three months. The price level of the 3rd quarter 2007 was exceeded by more than 8 percent.

Lower demand: From July to September 2008 business developments were less encouraging, both at home and abroad. Irrespective of price increases, German chemical companies saw a drop in sales. Seasonally adjusted, chemical industry sales totalled some 42.4 billion euros and were 1 percent lower than in the previous quarter. Sales in domestic business fell by 1.5 percent; sales abroad dropped by 0.5 percent.

Stable employment situation: With 439,800 staff the employment situation in the chemical industry was almost unchanged, regardless of the less friendly business situation.

The German chemical industry association Verband der Chemischen Industrie (VCI), headquartered in Frankfurt, represents the economic-political interests of 1,600 German chemical companies and subsidiaries of foreign groups in Germany – in contacts with politicians, public authorities, other stakeholders in the economy, science and the media. VCI stands for over 90 percent of chemistry in Germany. In 2007 the German chemical industry achieved sales of ca. 174 billion euros and employed over 437,000 persons.