Germany's chemical producers in brighter mood

07 September 2005 17:27  [Source: ICIS news]

FRANKFURT (ICIS news)--A brighter mood in the German chemicals industry following a buoyant July and August prompted industry association VCI to maintain its 2.5% production growth forecast for the sector in 2005 despite a decline in second quarter output compared with January to March this year.

The VCI noted on Wednesday that the usual summer lull this year was practically absent and forecast that the chemicals economy will strengthen over the next few months, although it did caution that higher oil prices threatened margins.

VCI's figures Q2 show German chemicals output fell 1.6% against the 2005 first quarter as producers throttled back production in the face of slacker demand. Output levels were, nevertheless, 7% above the weak April to June 2004 quarter.

Industry-wide sales totalled Euro38.4bn ($48.2bn), almost 2% above Q1 2005 and 8% above Q2 2004. Foreign sales increased 8.2% year-on-year to Euro20.7bn, while domestic sales rose 7.3% to Euro17.7bn.

Producer selling prices in April to June this year were in line with the first quarter, but 4% above Q2 2004, VCI said. It added that producers of base chemicals largely have been able to pass on higher raw materials costs, while manufacturers of fine and speciality chemicals have been less successful. For the rest of the year the association forecast that selling prices would rise by 4.5% but warned that margins could be squeezed by higher oil prices.

One of the encouraging trends is that the German manufacturing sector seems to be recovering, the VCI indicated. Even if “exports” to other EU countries remain the mainstay of businesses, the gap between domestic and foreign orders is narrowing, it added.

Figures published on Tuesday by the German economics ministry seem to confirm the upward trend. The ministry said orders for German industrial goods rose 3.7% in volume terms in July against June and that orders for the two months were 6.5% above the 2004 period.

German chemical industry output and prices: Q2 2005 versus Q2 2004

 

	Production (%)	Prices (%)
Inorganic base chemicals	+ 2.8	+10.6
Petrochemicals and derivatives	+24.2	+ 8.3
Polymers	+ 4.0	+ 8.7
Fine and specialty chemicals	- 4.3	+ 1.5
Pharmaceuticals	+ 6.8	- 0.8
Agrochemicals	+23.3	+ 4.9
Soap, washes and toiletries	+ 1.3	+ 0.0

 

By: Dede Williams
+44 20 8652 3214

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