German chemical industry outlook remains subdued – survey

13 April 2012 16:40  [Source: ICIS news]

LONDON (ICIS)--The near-term business outlook for Germany’s chemical producers remains subdued, a trade group said on Friday, citing an industry survey.

German chemical employers trade group BAVC said its latest industry survey showed that producers do not expect much improvement in their business this year compared with 2011.

Only 21% of the 679 firms polled by BAVC said they expect a year-on-year improvement. Meanwhile, 20% expected a decline, with the remaining 59% seeing no change.

One third of the companies said they expected their 2012 net return on sales to be 3% or less, with many firms fearing they will record a loss this year, BAVC added.

A key factor hurting prospects for Germany’s chemical industry in 2012 are the low or negative GDP growth rates expected in many EU countries in the wake of the eurozone debt crisis.

The weak overall EU economy is hitting major customer markets of Germany’s chemical industry, such as the electronics and construction sectors, but also the automotive sector, BAVC said. The EU is by far the most important market for German chemical firms.

In addition, high raw material costs – driven by high oil prices – are weighing on chemical industry margins. More than half of the firms polled by BAVC said they would find it difficult to pass rising raw material costs on to their customers.

Furthermore, 45% of the chemical producers polled said that Germany’s high energy and electricity prices are already hurting their competitiveness. Following Germany’s decision to end nuclear power generation by 2022, the industry expects further increases in its energy and electricity costs.

The BAVC survey findings are in line with a recent forecast by Germany’s chemical producers trade group VCI, which said last month it expects no year-on-year growth in the country’s chemical production this year.

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog

By: Stefan Baumgarten
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