VCI, the German chemicals lobby, says that despite a weak third quarter, there is no sign of a turnaround for the sector.

VCI, the industry lobby, said that Germany's chemical sector saw a drop in production, sales, and prices during the third quarter. The industry is still under pressure due to overcapacity and high operating costs, as well as a challenging economic climate.

German Chemicals Association reported that quarterly production in the chemical industry including pharmaceuticals fell by 1.5%, while producer prices dropped by 0.6%.

Third-largest industrial sector of Europe's economic powerhouse, Germany, can be seen to be a bellwether. It produces materials components that are used in a wide range of sectors from agriculture and textiles to automotive and construction.

"The chemical industry is in trouble on every front." "Production, sales, pricing, capacity utilization - everything is on the decline," VCI's Managing Director Wolfgang Grosse Entrup stated in a recent press release.

VCI reiterated that a turnaround in the sector is "not in view", as it reiterated their gloomy forecasts for 2025, which include production volumes falling by 2%, and industrial sales dropping by 1%.

Industry is growing impatient for political changes. The lobby for the chemical industry said that there was "no hope" in the political actions it had called for. It noted that recent economic policy adjustments made by the German Government and special funds have not provided meaningful relief to the sector. Grosse Entrup said at a press briefing that "something really needs to happen right now and we do not have the time."

The alarm bells are ever more ringing for us due to the current numbers. It's a red alert, and we don't think the situation will improve anytime soon, he said. Grosse Entrup says Germany is lacking a convincing strategy for restoring industry confidence. Meanwhile, disagreements within the coalition government over priorities have led to a decline in private investment, and weakened potential growth.

He said that the initial goodwill toward the new government had been exhausted, and the industry was growing impatient. (Reporting from Anastasiia Kozolova and Ozan Egenay, Gdansk. Editing by Milla Nissi-Prussak.)

(source: Reuters)