VCI report on the business situation of the industry in Q1 2019
Weak dynamics in German chemical business
Production increase by 0.5 percent over the previous quarter ++ Drop in chemical prices by 0.3 percent ++ Decline in the industry’s sales by 1.1 percent ++ Outlook: 2019 will be a difficult year for the chemical. industry.
The German chemical-pharmaceutical industry started the year 2019 in a difficult economic environment with weak growth – according to the most recent quarterly report published by the German chemical industry association VCI. Production in Germany’s third largest industry increased slightly in the first three months of this year, compared with the 4th quarter 2018. Plant capacity utilisation improved minimally too, while there was a drop in chemical prices. Consequently, sales did not keep up with the previous quarter. The demand for chemicals was low in Germany, because customer industries cut back production. With stagnant global industrial output, the picture abroad was similar for the industry. This phenomenon also made itself felt in Europe, the industry’s most important foreign market.
VCI President Hans Van Bylen on the situation of the chemical-pharmaceutical industry: “At the beginning of the present year, our industry developed somewhat better than in the previous quarter. All the same, we keep expecting a difficult year for the chemical industry.”
The VCI maintains its forecast for 2019 of a drop in chemical production by 3.5 percent. Producer prices should rise by 1 percent in the course of the year. The industry’s sales are projected to decline by 2.5 percent to 197.9 billion euros.
In the 1st quarter 2019, chemical production increased by 0.5 percent against the previous quarter and was 6 percent lower than one year earlier. Excluding the pharmaceutical sector, the industry’s production was 2.5 percent down on the previous year. Plant capacity utilisation went up to 84.1 percent from January to March 2019.
In the period under review, prices of chemical-pharmaceutical products fell by 0.3 percent against the previous quarter but were still 1.6 percent higher than one year ago.
In the 1st quarter 2019, the industry’s sales dropped slightly against the previous quarter, i.e. by 1.1 percent to 48.3 billion euros. Thus, they fell 3.8 percent short of the relevant level 2018. With a decline by 2.6 percent, domestic business was clearly weaker than foreign sales. The latter went down by 0.2 percent.
From January to March 2019, employment in the chemical-pharmaceutical industry was constant, compared with the previous year. At present, the companies have 462,500 staff.
The full version of the VCI’s latest quarterly report (VCI-Quartalsbericht 1/2019, in German language) is available in the download section at the top of this page. Additonal material there: Executive summary of the report in English language, table with the final key figures for the overall year 2018 and VCI forecast for 2019as well as the two main charts of the report as jpg files in high resolution (indicators for 1st quarter 2019; development of chemical production excluding pharma 2015 to 2019).
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 more than 90 percent of the chemical industry in Germany. In 2019 the German chemical industry realised sales of ca. 193 billion euros and employed 464,800 staff.