Germany VCI forecasts 2012 chemical production growth at 1.0%

07 December 2011 13:00  [Source: ICIS news]

GermanyLONDON (ICIS)--Germany’s chemical production is forecast to increase 1.0% year on year in 2012 as growth weakens compared with 2011, the country’s chemical producers’ trade group, Verband der Chemischen Industrie (VCI), said on Wednesday.

In 2011, Germany’s chemical production is set to grow by 4.0% year on year, VCI said, below the 5.0% year-on-year growth the group had forecast.

“It is difficult to make an accurate forecast for the coming 12 months,” said Klaus Engel, the president of VCI and CEO of specialty chemicals major Evonik.

Engel pointed to the unresolved government debt crises in the eurozone and the US as factors causing increasing uncertainties among customers and producers.

VCI hopes a planned summit of EU leaders in Brussels will be able to resolve the eurozone crisis, he added.

Meanwhile, Germany-based chemicals producers are facing additional uncertainties from rising electricity costs because of the country’s renewable energy law, the Erneuerbare-Energien-Gesetz (EEG), and emissions trading.

In 2011 alone, the chemical industry’s costs from the EEG and related legislation added up to €1.3bn ($1.7bn), Engel said.

A further challenge is Germany’s move to abandon nuclear power generation following the catastrophic shutdown at the Fukushima nuclear plant in Japan caused by an earthquake and tsunami earlier this year.

Germany has already taken eight of its older nuclear plants out of operation and all such plants will be phased out by 2022.

Engel said that, over the winter months, Germany faces a “litmus test” to see if electricity supplies to chemical companies will still run smoothly after the eight nuclear plants have been switched off.

Nevertheless, Engel said he would not suggest there was a “crisis mood” in the chemical industry.

“[Germany’s] chemical industry will grow in 2012 as well, even though at a lower pace than this year,” he said.

Companies’ assessment of their overall business situation was on a level with the strong years of 2006 and 2007, he added.

“There are no recognisable signs in the real economy, that would, from our perspective, justify a crisis scenario,” said Engel.

As for sales and prices in 2012, VCI expects prices to rise 1.0% in 2012 and sales to increase 2.0%, he said.

In 2011, Germany’s chemical industry has recorded sales of €186.5bn, up 9% from 2010, while prices for chemicals and pharmaceuticals rose 5.0% year on year.

VCI said naphtha prices should “remain largely stable” in 2012, given the moderate growth forecasts for the global economy in coming months.

The group expects oil prices to range between $100/bbl and $120/bbl in 2012.

($1 = €0.75)

Read Paul Hodges’ Chemicals and the Economy Blog

By: Stefan Baumgarten
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