Sales increase The chemical industry is raging

As of: 06/09/2021 3:54 p.m.

The third largest German branch of industry has reached the pre-crisis level again. After growth in the first quarter, the chemical industry raised its forecast for the year. The pharmaceutical business in particular is doing better than expected. Despite the rise in raw material prices and delivery problems, the German chemical industry continued on its growth path in the first three months of the year. As announced by the German Chemical Industry Association (VCI), the sector increased its sales by 1.1 percent to 51.3 billion euros compared to the same period in the previous year. Production increased by 0.8 percent. Compared to the fourth quarter of 2020, sales growth was even 3.6 percent.

Again above pre-crisis levels

With the sustained upward trend, the third largest German industrial sector – after the car and machine builders – has already compensated for the corona dent. Production and sales are now back above pre-crisis levels. Above all, exports to EU countries increased. In addition, there was the increasing demand from Asia. The chemical industry was also able to grow in the German home market – thanks to higher prices.

“Hope for a good year in chemistry”

VCI President Christian Kullmann, who is also the head of the chemical company Evonik, was delighted with the development. “The first few months give hope for a good year in chemistry,” he said. “The demand for chemicals and pharmaceuticals is increasing.” The industry association is now even more optimistic about the year as a whole. For 2021, the VCI predicts sales growth of eight percent and an increase in production of 4.5 percent. So far, a plus of five percent in sales and an increase of three percent in production had been forecast.

“The demand for chemicals and pharmaceuticals is increasing.” – VCI President Christian Kullmann Image: picture alliance / dpa

Price increases and corona vaccines as drivers

Strong price increases for the chemical and pharmaceutical products manufactured should make a significant contribution to this. The association is anticipating 3.5 percent higher prices for the year as a whole. The chemical industry is also benefiting from the corona vaccine boom. There are numerous suppliers for the vaccines from BioNTech, Moderna & Co, including Evonik and Wacker Chemie. You act as a technology supplier or as a contract manufacturer.

Worry about delivery bottlenecks

Only supply bottlenecks for materials and intermediate products are dampening the good mood in the chemical industry. “They are now affecting the operational processes of every second company,” warned VCI President Kullmann. However, the situation should ease again in the course of the year. In March, the blockade of the Suez Canal interrupted the supply chain from Asia in the chemical industry. Around 16 percent of chemical imports and 18 percent of exports take this route.

Huge green electricity demand for climate neutrality

In addition, the more stringent climate protection targets are making the industry difficult. “The way there remains in the fog”, said recently Wolfgang Große Entrup, General Manager of the VCI. “For the new goal, our industry needs more electricity than Germany currently consumes overall – as green electricity.” If the industry does not get competitive prices for electricity from renewable energies, it will not manage the energy transition. In spring 2020, the association presented a study in which it considers climate neutrality by 2050 to be technically feasible. For this, however, enormous additional amounts of green electricity are required. By the mid-2030s, the chemical industry’s electricity needs will increase more than tenfold. In addition, the electricity price would have to drop to four cents per kilowatt hour, demanded the VCI. The industry currently pays between eight and ten cents per kilowatt hour.

BASF is pushing ahead

VCI President Kullmann considers the renewed tightening of climate protection targets and the more rapid increase in CO2 prices called for by the Greens in their election manifesto as “irresponsible”. At the annual chemistry conference of the “Handelsblatt”, he warned that those who shackle the industry put the ax to their transformation. Good politics are based on incentives and not on bans. BASF is one of the first chemical companies to commit to reducing greenhouse gas emissions to zero on a fixed date. The people of Ludwigshafen want to become climate neutral by 2050. Among other things, one should help huge wind farm in the North Sea that BASF is planning together with RWE . The plant with a capacity of two gigawatts is to supply the Ludwigshafen chemical site with green electricity from 2030.

More exports in April Exports almost up again Pre-crisis level

Status: 09.06.2021 11:00 a.m.

Thanks to strong demand from Europe and the USA, German companies exported more for the twelfth month in a row in April. Above all, cars “made in Germany” were in demand. The German export economy continues to grow – albeit not quite as strongly as it was recently. In April it achieved an increase of 0.3 percent compared to March. In total, the companies exported goods worth almost 112 billion euros. This was announced by the Federal Statistical Office. It was the twelfth consecutive month of growth in German exports.

48 percent more exported than in April 2020

Compared to the same month last year, the increase was almost 48 percent. However, this plus must be seen against the background that in April 2020 the German economy was fully in corona lockdown. The strongest growth in exports to Great Britain was in April of the current year. 64 percent more goods were sold there – compared to the same month last year. Exports to the EU countries rose by almost 59 percent and to the USA by around 60 percent. 16 percent more goods were exported to China.

German cars pull the most

German cars were the best exports. Car exports rose by 280 percent. However, this was related to the fact that car production had been shut down sharply due to Corona in April 2020. Exports of German electronic goods rose by 36 percent. In the meantime, exports are only 0.5 percent below the level of February 2020. That was the last month before the effects of the Corona crisis became noticeable in Germany and before the restrictions on the economy began.

Delivery bottlenecks and shortages of raw materials easily dealt with

Economists are impressed by Germany’s export strength. Although material shortages and the lack of intermediate products weigh on industrial production, “but at least the industry succeeds in exporting goods,” said VP Bank’s chief economist, Thomas Gitzel. In April, the German industry had produced less than in the previous month due to delivery bottlenecks and scarce raw materials. In May there could be a setback for the German export economy. The export expectations of the industry surveyed by the Ifo Institute fell from 23.9 points in April to 23.0 points.

Optimism for the rest of the year

Despite small skid marks, German exporters are confident for 2021. The German Chamber of Commerce and Industry (DIHK) recently raised its export forecast to plus eight percent. Previously, growth of only six percent was expected.