VCI: Chemical production and sales in Germany will decrease in 2024.

Recently, the German Chemical Industry Association (VCI) stated that it is expected that the production and sales of chemicals (excluding pharmaceuticals) in Germany will decrease by 1% and 5% respectively in 2024, due to further reduction in chemical business orders. The production of chemicals, including pharmaceuticals, is expected to remain at the level of 2023, while sales are expected to decline by 3%. VCI stated, "By the end of 2023, the German chemical industry is still in a recession. The current business situation and expectations for the next few months are both negative."

VCI stated that among the companies surveyed, 45% believed that the situation would improve as early as 2025, 40% complained about a decline in profits, and about 15% had already incurred losses. "The decline in sales, falling sales prices, and high production costs have put tremendous pressure on the company's profitability. At the same time, the continued difficult operating conditions have forced many companies to make painful adjustments," said Dr. Schleswig, CEO and President of VCI at Covestro "We are in a long and deep valley, and it is currently unclear how long we must persevere to get through it. The longer this situation persists, the more factories we have closed. In addition, VCI stated that it is not ruled out the possibility of abandoning loss making business areas, investing abroad, or laying off employees."

VCI stated that in 2023, the production of chemicals excluding pharmaceuticals decreased by 11%, while the production of chemicals including pharmaceuticals decreased by 8%, which is in line with expectations. The capacity utilization rate is approximately 77%, which has been below the economically necessary basic capacity utilization rate of 82% for nine consecutive quarters. Manufacturers of inorganic basic chemicals, soap, detergents, and cosmetics will reduce production by 10% in 2023, while production of fine chemicals and specialty chemicals will decrease by 4%. VCI stated that the entire German economy is affected by a weak business environment and structural issues, and there is an urgent need for profound policy changes, with a focus on competitive economic sectors to ensure a sustainable future.