German Chemical Industry Pleased With H1 2014
Germany's chemical producers are pleased with progress made in the first half of 2014. Production increased by 3% averaged across the portfolio, while sales rose 2%, despite a decline in prices by the same proportion, said the industry association Verband der Chemischen Industrie (VCI).
For full year 2014, VCI president Karl-Ludwig Kley said the association is upholding its forecast of a 2% rise in production. With prices expected to deteriorate by only 0.5%, a 1.5% improvement in sales to around €193 billion is forecast.
In the first half year, business with both domestic and foreign customers for German-made chemicals improved. Domestic sales increased "dynamically," according to VCI, adding 3.5% to touch €40 billion. By contrast, the industry's foreign sales gained only 1% to €58 billion. Due to the strong industrial economy, imports of chemicals into Germany also increased, by 4%.
Production capacities were utilized to around 85% from January to June. Most product segments saw improvement, with pharmaceuticals gaining 7%, fine and specialty chemicals 6% and consumer chemicals 2.5%. Petrochemicals squeaked by with a 0.5% rise. On the minus side were polymers, with a decline of 1.5%, and inorganic base chemicals with a fall of 3.5%.
The German chemical industry's sales to European customers improved by 3% in the first half, but the dynamics of business with customers in NAFTA were stronger. Thanks in particular to the strong recovery of the US economy, sales to the region picked up by 5%. Especially good demand was seen for pharmaceuticals and specialty chemicals.
By contrast, business with Asia was weaker than expected, with sales increasing only 0.5%. South America led the negative list, with a 10.5% slide, followed by Africa with a 3.5% setback.
Explaining the reasons for chemical producers' confidence, Kley pointed to Germany's strong industrial economy. Along with its continued success as an export nation, the domestic economy is also becoming increasingly robust, he said.
Outside Germany, signs are exceedingly appearing that the European economy has stabilised, Kley added. Here, business is likely to show improvement in 2014, even if the region is not showing much dynamism.
VCI member companies also hope to profit indirectly from the strengthening of the US economy on the back of an expansive monetary policy and the shale gas boom. The association strongly supports the proposed Transatlantic Trade and Investment Partnership (TTIP) as a "political chance" for German chemical producers.
Kley said producers expected TTIP to provide an impetus for reduction of tariffs, dismantling of non-tariff barriers to trade and contribute to overall improvement of business.