Lack of demand from industrial customers and the global economic uncertainties continue to create problems for the German chemical and pharmaceutical industry.
Weak numbers for the second quarter of 2019 have prompted the German Chemical Industry Association (VCI) to lower its full-year forecast for the third time in 2019.
There is no improvement in sight, the association reported on Wednesday in Frankfurt. Because the chemical industry supplies many primary products, it is regarded as an important leading indicator for the economic development of the overall economy.
The third largest industrial sector in Germany does not come from the doldrums. Production fell by 0.7 percent from April to June compared to the previous quarter. Compared to the same quarter of the previous year, the decline was even 8.8 percent.
As a reason for the slump, the VCI blamed the missing demand of the German industrial customers, where not just the auto sector weakened. There were also fewer orders from the most important foreign market in Europe. Quarterly sales stagnated at € 48 billion ($53 billion) compared to the first quarter, 4.3 percent below the record high of 2018.
For the full year 2019, the VCI lowered its forecast for the third time. He now expects a decline in sales by 5 percent to 193 billion euros ($213 billion). Production will decline by 6 percent with slightly rising chemical prices. In December, the association had predicted a 1.5 percent increase in production. In addition to the economic fluctuations, the end of production of a blockbuster drug in Germany also played a role.
“The companies are currently no longer expecting a revival in the German and European chemical business,” VCI President Hans van Bylen summed up the situation. “Only small growth impulses are to be expected from trade with the US and Asia because of the geopolitical risks.”
However, the industry is still well utilized with almost 465,000 employees in this country and is working at a high level of utilization of 83.4 percent. In 2018, the companies achieved a record turnover of 203 billion euros ($224 billion).
Source: German Chemical Industry Association (VCI)
