Corrected: German chems 2016 sales down 3%, sombre forecast for 2017 – VCI

In the ICIS news story published on 8 December titled ‘German chems 2016 sales down 3%, sombre forecast for 2017 – VCI’ please read in the third paragraph a corrected figure for exports, €111.5bn, and not €115.5bn as previously stated. A corrected version follows.

LONDON (ICIS)–German chemicals sales fell 3% during 2016 compared to the previous year as basic chemicals posted “minor growth” and the global economic landscape worsened, the country’s chemical trade group VCI said on Thursday.

Employment in the largest chemical industry in Europe, however, remained stable despite the bearish environment, at 446,300 employees, VCI added.

The 3% decrease corresponded to total sales of €183bn, with €71.5bn sold domestically (down 4% year on year) and €111.5bn exported abroad, a decrease of 2.5% compared to 2015.

Although production for the year rose slightly at 0.5%, the fall in chemical producer prices (of 2% compared to 2015) bit into sales.VCI also noted that the cost of German chemicals’ main feedstock, naphtha, averaged a price decrease of 17% during the year, on the back of the $44/bbl average of crude prices in 2016, .

Production of petrochemicals rose in 2016 by 0.5%, year on year, while polymers output rose by 1.5%. These gains were offset by a fall of 1.5% in inorganic basic chemicals production – which includes industrial gases and fertilizers.

Capacity utilisation in the industry stood for the full year 2016 at 83.7%, slightly higher than the 83.3% reported for 2015, a year which VCI had already described as “difficult”.

“Growth in our industry was not as high as we had anticipated only one year ago… in view of the political turbulences in Europe and the uncertainty among many market players, this result might not come as a surprise. All the same, it is unsatisfactory for us,” said Kurk Bock, VCI president and CEO of Germany’s chemical major BASF, pictured.

“Strong impulses from the global economy are missing. In particular, developments in emerging markets were disappointing: Russia and China were in recession. Growth was clearly getting weaker in China. This combination slowed down industrial production worldwide, which was reflected in slower growth of the global demand for chemicals.”

According to VCI, specialty chemicals output also decreased in 2016 by 0.5%, while production of soaps, detergents, cleaning products or cosmetics took a hit of 2.5% during the year.

VCI forecasts that the chemicals industry – excluding pharmaceuticals – will see slight increases in sales and producer prices in 2017, up 0.5% each, but production is expected to remain flat compared to 2016.

Including pharmaceuticals, however, VCI expects total production to rise by 0.5% in 2017, year on year, and sales to increase by 1%.

However, Bock spoke pessimistically about the European economy’s prospects to pick up in 2017 as the region faces crisis in many fronts.

“The uncertainty and the risks to the economy have even intensified over the past months. This applies particularly to the EU, our home market. For example, the result of the Brexit referendum has adversely affected the investment and consumption climate in Great Britain,” he said.

“Moreover, the EU is burdened with a long list of further problems: the refugee crisis, the unstable banking sector, the difficult government formation in Spain, the latent inability to pay of Greece, the constitutional referendum and the government crisis in Italy.”

VCI’s president also spoke about the “controversial” debate about trade and investment agreements like the EU-Canada’s CETA or the EU-US’ TTIP.

The former had a hard time to be approved after seven years in the making on the back of a rebellion by a Belgium province’s assembly, while negotiations for the latter are practically stalled due to frictions between the two parties, and the protectionist impetus of the new US president, Donald Trump.

In July, VCI already said that the chances of TTIP being approved were diminishing.   

“At the moment, hardly anything speaks for the economy picking up in Europe,” concluded Bock.

Pictured above: Chemical laboratory at the disused ironworks Henrichshuette and current industrial museum in Hattingen, west Germany
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