VCI: German chemical industry runs at its lowest capacity for more than 30 Years
The German Chemical Industry Association said Wednesday that its capacity utilization in the second quarter was at its lowest level for more than 30 year as sales and prices fell due to uncertainty surrounding U.S. Tariffs.
VCI reported that the German chemical industry only operated at 72% of full capacity in the period April-June, which is the lowest level seen since 1991 and far below the level needed to break even.
VCI said that pull-forward effects on business with the United States decreased throughout the period of April-June, because exports were brought forward to prepare for tariffs on European goods.
European chemical manufacturers face new challenges due to the disruption of global trade by U.S. Tariffs. Customers are delaying purchases, and demand is weakened in a sector that has yet to recover from the energy crisis of 2022.
The overall production of the German chemicals industry, including pharmaceuticals, fell by 3.8% from quarter to quarter. This is in contrast with a 6.7% quarterly rise between January and March.
In a press release, VCI managing director Wolfgang Grosse Entrup stated that "weak demand, decreasing sales, and production well below pre-crisis level" are the reality of our industry, as well as many other parts of German Industry.
This sector, which is the third largest industry in Europe's economic superpower Germany, can be viewed as a bellwether of the wider economy, as it produces material used in sectors such as automotive, construction, agriculture, and textiles.
The pharmaceutical output dropped by 5.6% in comparison to the previous quarter.
In an annual comparison, the overall quarterly production fell 3.1% or 5.1% excluding pharmaceuticals, while revenue dropped by 2.7%.
The industry has maintained its guidance that production volumes, including pharmaceuticals, will fall by 2% in 2025 and industrial sales will drop by 1%. Bartosz Dabrowski in Gdansk and Cian Muenster report.
(source: Reuters)
