15 October 2008 16:46 [Source: ICIS news]
TORONTO (ICIS news)--The outlook for Germany’s chemical industry keeps worsening as increasingly negative impacts from the global credit crunch add to challenges from feedstock and energy costs, a strong euro and weak European industrial demand, chemical employers said on Wednesday.
“Germany’s business climate has deteriorated markedly in past months,” said the country's chemical employers group Bundesarbeitgeberverband Chemie (BAVC) and pointed to forecasts and indicators by economic research institutes.
BAVC’s assessment came as European chemical firms’ share prices dropped amid fears that Germany was on the brink of a recession.
Domestic demand was impacted by increasing inflation rates and export demand was slowing, the group said.
Another factor was the deepening financial and credit crisis, it said, but added that it was still too early to exactly predict the crisis’ impacts.
While earlier in the year the industry had hoped for 2.5% overall production growth in 2008, a rate of only 1% was more likely, the Wiesbaden-based group said, echoing predictions by German chemical industry body VCI.
For July, German chemical production stagnated at +0.1%, compared with the same month last year.
For the first seven months through July production was up only 0.6% year-on-year, it said.
Support came from pharmaceuticals and polymers, which grew 5.1% and 1.0% from the year-earlier period, while other sectors such as basic inorganic chemicals, fine and specialty chemicals, and soap and detergents-related chemical products shrank.
The first seven months were marked by high input costs. Naphtha costs, for example, rose 12.5% to €631/tonne ($858/tonne) in the second quarter, from the first quarter.
Even though producers hiked chemical product prices, not all cost increases could be passed on to customers, said BAVC.
Meanwhile, productivity growth per worker in the industry averaged only 0.8% during the first seven months through July while wage and salary costs rose 3.2%, it said.
($1 = €0.73)
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