VCI: Maintain the downside forecast of German chemical industry

Recently, the Association of the German Chemical Industry (VCI) released the statistical report of the German chemical industry for the third quarter and the
forecast for the whole year.
It is reported that the agency maintained its full-year production forecast published in September, expecting chemical production (excluding pharmaceuticals) to fall by 8.
5% in 2022, and German chemical production will fall by 5.
5%
this year if the pharmaceutical industry is included.
VCI believes that German chemical producers have been hit by rising energy prices, and it is difficult to pass on the rising costs to downstream customers, resulting in having to reduce production
.

Regarding the performance of the German chemical industry in the third quarter, VCI said that the German chemical and pharmaceutical industry is still severely
affected by the energy crisis.
Production in the German chemical industry (excluding pharmaceuticals) fell 14.
1% year-on-year and 7.
2% sequentially in the third quarter; Production of chemicals, including pharmaceuticals, decreased 10.
3% year-over-year and 4.
1%
sequentially.
Capacity utilization in Germany's chemical and pharmaceutical sectors fell to 79.
3 percent in the third quarter, below normal levels
, VCI said.
At the same time, producer prices only increased by 2.
6% month-on-month and 23.
7%
year-on-year.

Sales revenue from the German chemical industry fell 1.
6 percent to 63.
1 billion euros in the third quarter, the first decline in the figure in two years, according to VCI, with a prominent
decline in domestic sales.
The agency believes that weak demand due to the continued deterioration of the global macroeconomy is an important reason for
the decline in sales revenue.

For the fourth quarter, VCI does not see a significant improvement
in fundamentals.
In the current environment, the cost of continuing production remains high and may not recover
until 2023.

Steilemann, CEO and President of VCI, Covestro, said: "The outlook for the German chemical industry will be even darker
in the coming months.
Due to the significant increase in energy costs, the production of many German companies is already in an extremely difficult situation
.
In particular, small and medium-sized enterprises that have expired electricity or gas supply agreements have encountered great problems
in concluding follow-on contracts or new contracts.
The situation will get worse
as winter sets in and gas storage declines.
Therefore, we now need more suitable energy prices
.
”