Strong Domestic Demand Boosts German Chemicals in Q1

14.05.2014 -

Thanks especially to strong business at home in the first quarter of 2014, German chemical producers were able to increase sales 5% year-on-year to € 46.8 billion, says the industry association Verband der Chemischen Industrie (VCI). Domestic sales rose by 6%, while foreign sales increased 3.5%. Demand from the US and Asia was below expectations.

VCI said business with base chemicals, including inorganics, petrochemicals and polymers, was "disappointing," with output down 6.7% against Q4 2013 and by 3.5% against Q1 2013. Fine and specialty chemicals saw strong demand, however.

Chemical production in Q1 2014, while lower than in the final quarter of 2013, rose 4.2% year-on-year. Selling prices remained largely stable in the first quarter after a decline in last year's fourth quarter, but were down 2.4% year-on-year. Output of fine and specialty chemicals rose 5% against last year's final quarter and 10% against the year's first quarter.

After seeing a sharp rise from October to December 2013, pharmaceutical production rose by a further 0.7% from January to March. The improvement against the 2013 first quarter was 11%.

Employment in the German chemical industry increased by 0.5% in Q1 2014 to 440,000.

For full year 2014, VCI is upholding its forecast of a 2% increase in chemical production. Flanked by a 0.5 % fall in prices, industry-wide sales are expected to rise by 1.5% to €193.5 billion.

On the back of strong domestic demand and continued improvement in the rest of the Eurozone, most German chemical producers expect business to gather momentum in the coming months, the association said.

VCI President Karl-Ludwig Kley said sentiment among member companies is cautiously optimistic, among other reasons, because of the "positive trends" in the Eurozone. Rising industrial production in the EU can be expected to translate into stronger demand for German chemical industry products. Around 70% of the industry's foreign sales are transacted in other European countries.