Outlook for German Chemicals Is “Bleak”
Year-on-year, production rose 2.8% against the first 2021 quarter, and sales revenue improved by 28.4%. VCI attributes the positive output total entirely to pharmaceuticals, as chemical production declined 1.1% in the quarterly comparison and 1.6% in the annual tally. Producer selling prices soared by 21.6% against the 2021 first quarter. Capacity utilisation rates declined to 80.9% in Q1 2022 from 81.5% in Q4 2021, while employment figures held up at around 473,000.
From January to March 2022, VCI member companies continued to struggle with supply chain bottlenecks and sharply rising energy and raw materials costs, both issues that were exacerbated by the war in Ukraine. Reflecting this, many businesses are concerned about potential shortages of gas and oil for energy and feedstocks, the producers’ grouping said.
Crude oil notations rose to nearly $99 per barrel in the year’s early weeks months, and at some point during the quarter, the figure was $130 per barrel, all in all an increase of more than 63%. Naphtha prices climbed about 23% higher to €78.4 per tonne. Even if the peaks were shaved off over the quarter prices remained high, with natural gas prices 200% higher. Chemical producers are finding it hard to pass on price increases, VCI noted.
Nothing remains of the hoped-for spring recovery after a winter dogged by coronavirus infections and restrictive measures, VCI president Christian Kullmann, CEO of Evonik, said in presenting the association’s report. Perspectives for the industry are “growing bleaker” and with supply chains disrupted and prices rising, customers are reducing output and order volume, he said.
Due to the unpredictable consequences of the war in Ukraine and China’s restrictive “Zero-Covid” strategy, the industry association has refrained from making quantitative forecasts for the industry’s full-year outlook. An embargo on Russian gas imposed by the EU or Russia itself pulling the plug would have “further devastating effects on the chemicals sector, Kullmann stressed.
Author: Dede Williams, Freelance Journalist