The difficult environment continues to cause difficulties for the chemical-pharmaceutical industry. This was reported by the German Chemical Industry Association (VCI) in its quarterly report. The German industry has cut back production and reduced orders for chemicals in the past three months, which is why the recovery lost momentum in the second quarter.
The lack of orders continued, which is why many chemical plants were not operating at profitable capacity. At the same time, demand from abroad declined, while energy and raw material costs rose again. The situation in the pharmaceuticals business is also less than rosy: Production slipped into the red and sales of pharmaceutical products abroad fell.
VCI expects sales growth despite falling prices
VCI Managing Director Wolfgang Große Entrup comments on the economic situation in the industry: “The mood in our industry has cooled noticeably again. This is because the global economy has not picked up speed as hoped. There are therefore no signs of a sustained upturn in demand. At the same time, competitive pressure is increasing. The structural problems in Germany also remain unresolved. The announced growth initiative is a step in the right direction. But the announcement alone has not yet brought about a change in mood. Four out of ten industrial companies are now considering cutting back production further or even moving abroad. It is high time to finally tackle the structural problems at the location. We also see room for improvement in the pharma strategy.”
Nevertheless, the VCI still expects production to increase by 3.5% for 2024 as a whole. Despite falling prices, industry turnover is likely to increase by 1.5% this year.
Key industry developments in the second quarter
- Production rose by 0.8% compared to the previous quarter. It was therefore 3.7% higher than a year earlier. At 75.1%, capacity in the sector was still not being utilized profitably.
- Producer prices rose by 0.8% compared to the previous quarter due to rising costs. However, chemical and pharmaceutical products were still 2.4% cheaper than a year earlier.
- Seasonally adjusted, total turnover in the chemical and pharmaceutical industry fell by 0.7% to a total of 53.8 billion euros. The previous year's level was also slightly missed.
- Employment in the chemical and pharmaceutical industry only remained at a high level of around 479,500 thanks to growth in the pharmaceutical sector.
The complete quarterly report can be downloaded free of charge from the VCI website. For more information, visit www.vci.de.
