Little improvement expected for German chems sector in 2025- VCI

LONDON (ICIS)–Germany’s chemicals and production is expected to have increased by 2% in 2024, while output growth is set to slow next year, sales could stagnate and prices fall, trade group VCI said on Friday.

The chemicals sector drove the projected 2024 productivity uptick, with output increasing 8% and helping to offset a 1.5% decline in pharmaceuticals sector productivity, driven by supply chain issues, capacity bottlenecks and high costs.

Despite the overall increase in output expected for this year, productivity in the sector remains 16% below levels seen in 2018, with the drop more pronounced for chemicals.

Projected sales of €221 billion represent a 2% annual decline in 2024, while sales are expected to have fallen by 2.5%.

The declines in sales and pricing are expected to be less substantial next year but there is little hope for a pronounced uptick, with no volume growth expected year on year and pricing to fall 0.5%.

Even the muted 0.5% forecast productivity increase is expected to be driven largely by the pharmaceuticals sector, with the chemicals sector alone expected to stagnate.

“Our stocktaking is bleak,” said VCI president and Covestro chief Markus Steilemann. “The only ray of light is that the rapid downturn of the last two years has not continued.”

VCI, German’s largest trade group for the chemicals sector, projects more closures in the domestic industry in future, as average operating rates remain at lossmaking levels.

”On average, capacity utilisation of production plants was only 75%. In four consecutive years mow, the chemical and pharmaceutical industry has clearly been below the base value for profitable operation,” the VCI said.

“In consequence… plants were permanently shut down in recent months. Yet more closures are likely to follow,” the association added.

Some companies are currently projecting an upward trend for summer or autumn 2025, but every second company is bracing for a recovery to occur in 2026 or later, the VCI said.

Thumbnail photo: Evonik’s production complex in Marl, Germany (Source: Evonik)