FocusGermany facing raw material supply squeeze

03 December 2010 19:30  [Source: ICIS news]

By Stefan Baumgarten

TORONTO (ICIS)--Germany is facing a raw material supply squeeze that threatens to hurt the international competitiveness of its industry, including its many chemicals producers, the country’s chamber of commerce said on Friday.

The German Chamber of Industry and Commerce (DIHK) said 90% of 1,100 producers that it polled in a recent survey complained about rising raw material prices and increasing difficulties in accessing raw material markets.

Just over 50% of firms even feared that they may soon be cut off from important raw materials altogether, the chamber said. DIHK did not disclose how many chemical producers were included in the survey.

Manfred Ritz, spokesman for Frankfurt-based German chemical producers group VCI, told ICIS that some medium-sized firms in certain niches had reported problems in obtaining certain raw materials.

However, VCI did not currently have sufficient feedback from member firms to say to what extent there was a broad-based raw materials supply problem thoughout the industry, he added.

"We have heard from some firms, but we cannot say if there is a general trend," he added.

In its recent third-quarter update, VCI noted a "slight relaxation" in raw material cost pressures as oil prices fell, compared with the second quarter.

However, DHIK president Hans Heinrich Driftmann said that this year alone, Germany’s industry faced a €30bn ($39bn) year-over-year increase in costs, because of higher raw material prices. 

He predicted that raw material prices would would continue to rise next year amid strong demand because of the global recovery.

“Reliable and secure raw material supplies are becoming an ever larger economic risk, even though Germany’s industrial producers are relatively more resource-efficient internationally,” he said.

Driftmann said an additional difficulty for German industry was that more and more raw material suppliers insisted on short contract terms - thus making it harder for firms to plan ahead.

The chamber called for broad European and international agreements to create transparency on raw material markets and remove barriers to supplies, and it also called for increased research and development into alternative materials and solutions.

It also said that Germany’s broad range of recycling programmes helped in mitigating raw material shortages.

However, it warned against further increases in industry recycling quotas, as planned by Germany’s environment ministry. Raising the quota even further would be too expense and bureaucratic for firms, the chamber said.

Earlier this year, BASF CEO Jurgen Hambrecht said that access to affordable raw material was a concern, and former Bayer CEO Werner Wenning has also said that raw material supply would be a key challenge.

In related news, an economics institute said earlier this week that Germany’s raw material prices, excluding energy, had hit an all-time high in November.

The full DIHK survey report is available, in German, on the chamber’s website.

($1 = €0.76)

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By: Stefan Baumgarten
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