LONDON (ICIS)--German chemicals producers' expectations rose in April, supported by an uptake in key downstream markets, according to the latest data from the Ifo Institute on Friday.
This reflected the institute’s indicator for overall manufacturing expectations, which rose from 30.2 points in March to 33.1 points in April – its highest level since 1991.
“Order books are filling up, and there is still some catching up to do in the wake of the crisis last year. Nearly all industries are announcing production increases. The electrical and automotive industries in particular are looking to greatly expand their production,” said Ifo expert Klaus Wohlrabe.
While sentiment is buoyant, desires to increase output may be capped by constricted supply chains, with 45% of manufacturers surveyed confirming bottlenecks in a recent Ifo survey.
This was also the highest level on record (since 1991), rising from 18.1% in January and 7.5% in October, exacerbated by the severe storm in the US in February and the Suez Canal blockage in late March.
Not all markets recorded the same tightness, but for industries already struggling with a lack of semiconductors – such as automotive, computer and electrical equipment producers – this posed further problems.
Germany’s automotive sector indicator has reached its highest level since April 2019, with the order backlog for April reaching 43.9 points, up from 17.5 points in March, driving plans to increase production.
Problems obtaining intermediate products was the biggest issue for producers, confirmed by 60.4% of companies in April. Lack of orders fell to 13.7% for the same period, compared to 59.8% a year prior.
Despite the ramp-up of demand from export and domestic markets, the industry is suffering from threats to employment, due to changing emissions regulations. The shortage of silicone chips has even led several producers to introduce short-time work at their plants.
Thumbnail picture: An FFP2 mask production line in Germany. Source: Sascha Steinbach/POOL/EPA-EFE/Shutterstock