Germany’s VCI says chemical industry’s half-year sales fall 1%, confirms outlook

(Reuters) – Germany’s chemical industry recorded sales of 112 billion euros ($121 billion) in the first half of 2024, down 1% from 114 billion euros last year, as the mood in the industry remains cautious, industry lobby VCI said on Monday.

The chemicals sector, Germany’s third-largest industry that employs roughly half a million workers, continues to struggle as customers are reluctant to place new orders amid prolonged economic uncertainty that has kept raw materials and energy prices high.

For the first half of the year, the chemical industry including pharmaceuticals recorded a 3% rise in industrial production – still 11% lower than in 2021 – while producer prices dropped by 4%, VCI said.

“There is a silver lining, but there can be no talk of a stable upward trend,” Markus Steilemann, VCI president and CEO of Covestro, said in a press release. He added that a lack of orders, high energy prices and bureaucracy were still the biggest concerns for the sector.

VCI, which represents around 1,900 companies in the chemical industry, reiterated its outlook for the year, expecting production volumes including pharmaceuticals to grow by 3.5% and industrial sales by 1.5%.

“The truth is also that one in five companies still sees no light on the horizon and that economic recovery is a long way off,” Steilemann said, adding the structural disadvantages in Germany were “too heavy a burden”.

The downbeat comments contradict the Ifo economic institute’s latest barometer for the industry, which in May returned to positive territory for the first time since the start of the war in Ukraine, driven by the improving economic situation and higher demand from outside of Europe.

($1 = 0.9228 euros)

(Reporting by Anastasiia Kozlova and Ozan Ergenay in Gdansk; editing by Milla Nissi)

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