UpdateGermany chem trade group cuts 2012 forecast after weak Q4

01 March 2012 14:34  [Source: ICIS news]

(updates throughout, adds comments from VCI general manager)

LONDON (ICIS)--Germany's chemical producers’ trade group has revised its 2012 chemical production output forecast for the country to zero after reporting a decline in production in the fourth quarter of 2011, it said on Thursday.

Frankfurt-based VCI had previously forecast 1.0% year-on-year growth in Germany’s chemical production for 2012.

The revision came after VCI reported that Germany's 2011 fourth-quarter chemical production had fallen by 2.0% from the third quarter; excluding pharmaceuticals, the decrease was 2.3%.

Compared with the fourth quarter of 2010, production was down by 4.3% year on year; excluding pharmaceuticals, the year-on-year decrease was 6.0%.

However, the trade group said that the longer-term prospects for the country’s chemical industry remain promising.

Production growth should resume in 2013, rising by about 2.0–3.0% from 2012, it said. Through 2020, VCI expects Germany's annual chemical production growth to average 2.0–2.5%.

VCI general manager Utz Tillmann said that headwinds from the eurozone debt crisis had hit the chemical industry in the fourth quarter. The industry now seemed to be in a trough, he added.

However, Tillmann said there were signs that the situation was improving, and he pointed to recent economic sentiment indicators and industry surveys.

Germany’s industrial production is forecast to show moderate growth going forward, a trend from which chemical producers should benefit early on, given that industry inventories are likely to be depleted.

“We are working on the assumption that dynamic forces will prevail in coming months,” said Tillmann.

As for the fourth quarter of 2011, Germany’s chemical producers ran their plants at 81.7% of capacity utilisation. This compares with 84.0% in the 2011 third quarter.

Fourth-quarter chemical industry sales fell by 2.3% from the third quarter, to €41.7bn ($55.6bn). Compared with the 2010 fourth quarter, sales were up by 1.8% year on year.

Chemicals prices stayed at a high level in the fourth quarter, but they did not continue to rise further after strong price hikes in the earlier part of 2011, VCI said.

Despite the weak quarter, firms continued to hire workers. The industry now employs 427,000 workers, 3% more than in 2010.

For the full year of 2011, VCI reported Germany’s chemical production up by 2.2% from 2010; excluding pharmaceuticals, the increase was 1.2%.  In its previous update from December last year, VCI had put 2011 chemical production growth at 4.0%.

Full-year sales were €184.2bn, up by 7.7% from 2010. Producer prices rose by 5.2%, while full-year capacity utilisation averaged 84.7%, compared with 84.6% in 2010.

“Those numbers, however, cannot disguise the fact that the economic recovery has run out of breath, even in Germany – and chemical producers felt this early on,” VCI said when commenting on the full year.

In fact, Germany's chemical production had been falling – on a sequential month-to-month basis – since May 2011, the group said.

($1 = €0.75)

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