German chemical exports decline

Verband der Chemischen Industrie (VCI), Germany’s main chemical industry association, says its members experienced a noticeable drop in export sales in the first 6 months of the year. The group blames high German production costs and weak industrial demand in China, Europe, and the US. Sales fell by 3.7% to European Union countries and 3.9% to North America.

Germany’s chemical sector has been relying on foreign sales to buoy its financial performance following a sustained period of weak domestic demand. “In addition to the disappointing domestic business, there is now also a headwind in the export business,” Henrik Meincke, VCI’s chief economist, says in a press release. “The hoped-for recovery is in danger of running out of steam.”

In contrast to the situation for chemicals, German pharmaceutical exports increased during the period in the key markets of Asia and the US, with sales to North America growing by over 13%, VCI says. The group expects drug exports to continue to grow.

The German economic institute Information and Forschung paints a less pessimistic outlook for Germany’s chemical producers. It surveyed chemical industry executives in August and found that most expect their exports to remain stable in the near term.

Meanwhile, Germany’s largest chemical maker, BASF, says it will cease production next year of the nylon precursors adipic acid and cyclododecadone and the intermediate cyclopentanone in Ludwigshafen, Germany. The company says it decided to close the plants “to ensure competitiveness under changing market conditions.” BASF will continue to produce adipic acid in France and South Korea.

In another potentially negative turn of events, Volkswagen—a major customer for Germany’s chemical sector—says that for the first time in its 87-year history, it is considering closing plants in Germany because of lower-than-expected demand for electric vehicles in Europe. The company disclosed in June 2023 that it wants to cut costs by $11 billion by 2026.