VCI report on the business situation of the industry in the 2nd quarter 2018
Slower growth in the German chemical industry
Production increase by 1.2 percent over the previous quarter ++ Rise in chemical prices by 0.6 percent ++ Stable sales at a high level (–0.1 percent) ++ Outlook: less dynamic chemical and pharma business.
In the chemical-pharmaceutical industry in Germany, stock-taking is satisfactory for the 2nd quarter 2018. However, the growth momentum from the beginning of the year slowed visibly, according to the latest quarterly report published by the German chemical industry association Verband der Chemischen Industrie e. V. (VCI). From April to June 2018, sales in Germany’s third largest industry stagnated at a high level. While domestic sales fell slightly, the industry recorded its eight consecutive sales increase in foreign business. Production went up only moderately in the period under review. Rising raw material costs brought higher prices for basic chemicals. Overall, chemical companies are still satisfied with their current business situation – but the expectations for the future are less optimistic due to growing economic risks in connection with the approaching Brexit and the unsettled trade dispute between the USA and China.
VCI President Kurt Bock on the industry’s business situation: “Sales and capacity utilisation remained at a high level for the chemical industry in the second quarter. However, there are many indicators of a slower demand in the second half of the present year, compared with the initial six months. In particular, the export expectations are no longer as positive as in early 2018.”
For 2018, the VCI maintains its forecast of 3.5 percent growth in German chemical production. Prices of chemicals are anticipated to rise by 1.5 percent. Chemical industry sales should grow by 4.5 percent to 204 billion euros.
In the 2nd quarter 2018, chemical production improved by 1.2 percent against the previous quarter and 5.4 percent against the previous year. Capacity utilisation of plants remained good at 84.5 percent from April to June.
Further rising raw material costs brought yet higher chemical prices in the 2nd quarter 2018. Thus, chemical products were 0.6 percent costlier than in the previous quarter and 1.1 percent more expensive than in the previous year.
Chemical industry sales remained stable at a high level from April to June 2018. There was only a minor drop by 0.1 percent compared with the previous quarter, while the previous year’s level was exceeded by 5.8 percent. This was largely attributable to foreign demand.
In the 2nd quarter 2018, chemical companies once more created new jobs in order to secure a skilled workforce. The industry has currently 459,700 staff. This reflects an increase by 1.5 percent against the previous year.
The full version of the VCI’s latest quarterly report (VCI-Quartalsbericht 2/2018, in German language) is available in the download section at the top of this page ("Complementary Downloads"). Additonal material there: Executive summary of the report in English language as well as the two main charts of the report as jpg files in high resolution (chemical business indicators for the 2nd quarter 2018, capacity utilisation from 2014 to the 2nd quarter 2018 by quarter).
The VCI represents the politico-economic interests of around 1,700 German chemical companies and German subsidiaries of foreign businesses. For this purpose, the VCI is in contact with politicians, public authorities, other industries, science and media.The VCI stands for over 90 percent of the chemical industry in Germany. In 2017 the German chemical industry realised sales of more than 195 billion euros and employed around 453,000 staff.