LONDON (ICIS)--Germany’s chemical producers’ group VCI has revised its forecast for the country’s 2019 chemicals-pharmaceuticals production to a 3.5% decline, down from the 1.5% growth forecast issued in December, the trade group said in an update on Tuesday.
While producer prices are expected to rise 1% this year, sales are likely to fall 2.5% to €198.5bn in 2019. In December, VCI had forecast a 2.5% increase in sales this year.
Pharma production was high in 2018, which somewhat distorts the year-on-year forecast, VCI said.
Excluding pharma, Germany's chemical production is forecast to fall 1.5% in 2019, the group said.
The drastic downward revision comes after a “very weak” fourth quarter when falling demand for chemicals from industrial customers in Germany and Europe forced companies to make major production cuts, the group said.
Q4 2018 production fell 10% from Q3, and it was down 6.3% year on year.
The strong drop was due to “a special effect” in the pharma sector, VCI said.
However, even after excluding pharma, chemical production alone fell 3.2% from Q3, it said.
Prices for chemical-pharmaceutical products rose 0.4% from Q3 and 2.7% year on year.
Sales fell 3.1% to €46.5bn from Q3, but they were up 0.4% from Q4 2017.
Domestic business improved most recently while foreign business “clearly suffered a setback”, the group said.
“The future is turning out less optimistic than in early 2018,” said VCI director general Utz Tillmann.
“The demand for chemical products in German and European industry is on the decline”, he said.
“Moreover, Brexit acts as a brake on the economy. All in all, the industry is expecting a generally weak year for chemicals,” Tillmann said.