Germany’s chemical industry is not emerging from its deplorable state, reports the German chemical industry association VCI (German chemical industry, Frankfurt) in its report for the third quarter of 2023, where it writes that «hopes for an improvement at the end of the year are fading.»
«Although the downturn appears to have bottomed out, however, there are no signs of a trend reversal. High prices for energy and raw materials, as well as the lack of orders both at home and abroad are still putting a lot of pressure on business. Our companies are therefore being forced to put the brakes on spending — by closing down production plants, discontinuing certain business lines or transferring investments abroad,» reports VCI President Markus Steilemann, who, in his role as CEO of Covestro, is feeling the plight of the chemical industry. Covestro’s 2023 results are at the lower end of its target despite a 23% drop in third-quarter sales.
For 2023, VCI still expects an 8% decline in chemical industry output, even though third quarter output rose marginally (1.7%) compared to the previous quarter for the first time in 18 months. However, the 8.4% annualized decline had a significant impact on earnings.
With customers still refraining from placing orders, industry sales, including the pharmaceutical sector, fell a further 0.3% to €54.8 billion in the third quarter. Although the decline is slowing, the sector’s sales are expected to fall by around 14% overall in 2023, VCI writes. Capacity utilization at manufacturing plants fell from 77.3% to 75.7% relative to the third quarter of last year.
The chemical industry’s headcount has remained largely stable to date at just under 480,000 employees. However, VCI reports that employment in much of the chemical industry has already fallen and the reduced work schedules have been able to prevent companies from «reacting more acutely to the difficult business situation».
It is noted that bankruptcies of large German polymer companies will increase by 25% compared to 2022. The industry association says that companies do not yet expect the situation to improve before the end of this year.