The business situation of the German chemical industry in the 1st quarter 2009

Low level start in the crisis year 2009

In the 1st quarter 2009 the downturn in the German chemical industry continued in all sectors. Production, sales and producer prices once more dropped clearly, as compared with the previous quarter. This is stated by the German Chemical Industry Association (VCI) in its newly published quarterly report on the business situation of this industry. As many plants remained shut down due to the weak demand for chemicals from industrial customers worldwide, capacity utilization fell to around 72 percent. However, in the course of the first three months of 2009, production stabilized at a low level.

Professor Dr. Ulrich Lehner, President of VCI, comments these developments: "The present year started unfavourably for our industry. But meanwhile there are increasing signals from important customer industries that we might have reached the trough. First positive signs for chemical business are also coming from some foreign markets, especially from Brazil and China."

Forecast: In the current economic environment, forecasts for 2009 as a whole are very difficult to make. Even if the economic situation of the chemical industry should further stabilize in the coming months, the VCI is expecting a production decrease by ca. 10 percent in the overall year 2009. Chemical industry sales are expected to drop by 12 percent against 2008.

Production: In the 1st quarter 2009 the chemical output fell by 8.1 percent, as compared with the previous quarter. The downturn reached almost all sectors. Particularly strong decreases were recorded by manufacturers of basic chemicals and fine chemicals. With a decrease by 6.6 percent, manufacturers of detergents and personal care products were not quite so hard hit. The crisis also makes itself felt in the pharma business, which is usually less sensitive to cyclical developments. Here, the output dropped by 1.5 percent against the 4th quarter 2008.

Producer prices: In the period from January to March 2009, the price level for chemical products was 2.8 percent lower than in the previous quarter. Falling crude oil prices and weak demand intensified the downtrend of producer prices, which had started to emerge already in the last quarter 2008.

Sales: In the 1st quarter 2009 chemical companies achieved sales of 34.5 billion euros. Seasonally adjusted, this was a drop in sales by 8 percent against the preceding three months – with foreign business shrinking more strongly than business in Germany.

Employment: In the 1st quarter 2009 the German chemical industry employed 440,400 persons, so that the employment situation was more or less stable.