08 July 2009 12:20 [Source: ICIS news]
LONDON (ICIS news)--Production of chemicals in Germany is expected to decrease by 10% and sales by 12% in 2009, but the industry has reached the trough of the recession, the country’s chemicals association, VCI, said on Wednesday.
"When we look ahead we see a glimmer of light amid dark clouds. Production has stabilised over recent months, even though at a very low level," said VCI president Ulrich Lehner.
He added that most VCI member companies were now expecting chemical business to pick up slightly in the second half of the year.
Since February the production of basic chemicals – a central indicator for business trends in the industry – has been improving slightly but steadily.
In the first half of the year chemical production in ?xml:namespace>
Capacity utilisation fell to another low of only 72%.
Sales in the first half fell by 16.5% to €69.7bn ($96.8bn), with foreign sales dropping 17% to €40.2bn and domestic sales at €29.5bn, a decrease of 16.5% compared with the same period in 2008. Exports dropped by 12% to €62.3bn.
VCI said that after a decline in prices at the beginning of the year, they had now been stable since April.
In the first half prices of chemicals were, on average, 1% lower than in the first half 2008, with petrochemicals prices falling 11% and polymers 4.5% year on year.
In the first half the German chemical industry employed some 439,500 persons, a drop of 0.5% from a year earlier. The VCI estimated that some 50,000 staff were currently on short-time working.
"In the current situation, it is understandable that maintaining their liquidity and reducing debts are priorities for many companies - over other strategic options,” said Lehner.
“Moreover, higher mark-ups for risks and shorter repayment periods at numerous banks and other credit institutes make it more difficult to finance major investments. Against this backdrop, we assume that German chemical companies will reduce fixed asset investments by 5-10% in 2009," he said, but added that no cuts were expected for research and development.
($1 = €0.72)
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