VCI affirms Germany chems production forecast despite Q3 decline

03 November 2011 14:03  [Source: ICIS news]

LONDON (ICIS)--Germany’s chemical industry trade group VCI on Thursday affirmed its previous 2011 forecast of 5.0% growth in the country’s chemical production, despite a sequential decline in third-quarter chemical production and sales amid the turmoil and uncertainty in financial markets.

“We remain optimistic, despite the recent weakness in the chemical industry,” said Klaus Engel, president of Frankfurt-based VCI and CEO of specialty chemicals major Evonik.

Germany’s chemical production fell 2.0% in the third quarter of 2011 from the second, VCI said in an update. However, year on year production was up 2.5% from the third quarter of 2010.

Excluding the pharmaceuticals sector, Germany’s chemical production was down 3.0% in the third quarter from the second, and up 1.5% year on year.

Third-quarter chemical industry sales were €44.5bn ($32.5bn), down 1.0% from the second quarter and up 6.5% year on year. Chemical producer prices rose 0.4% from the second quarter, and were up 5.3% year on year.

The industry’s domestic sales fell 1.5% from the second quarter but were up 5.5% year on year. Sales outside Germany decreased 0.5% from the second quarter and rose 7.5% year on year.

VCI cited the uncertainty in financial markets, driven by the debt crises in the eurozone and the US, in explaining Germany’s sequential declines in production and sales from the second quarter.

The uncertainty prompted chemical industry customers to reduce new orders and to cut inventories. In addition, some customers were delaying orders in the hope of lower raw material prices, the group said.

Germany’s full-year 2011 chemical sales should exceed €180bn, reflecting a 10% year-on-year increase, VCI said.

As for 2012, VCI noted signs of a “significant cooling” in the global economy.

However, even if Germany’s GDP growth should slow to about 1.0% in 2012, that would still mean that growth was continuing, the group said.

Meanwhile, many firms in the industry are looking at different scenarios to be prepared in case of a decline, it added.

VCI did not provide a specific 2012 growth forecast for Germany’s chemicals production and sales. The country’s government last month cut its 2012 GDP forecast to 1.0% growth, from its earlier projection of 1.8%.

($1 = €0.73)

Read Paul Hodges’ Chemicals and the Economy Blog

By: Stefan Baumgarten
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