VCI cuts chemical production forecast as uncertainty persists

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VCI cuts chemical production forecast as uncertainty persists

The German chemical industry association VCI (Frankfurt) expects chemical production to decline in 2025, but did not provide a specific rate of decline. The association said in a statement on March 12 that sales in the German chemical pharmaceutical industry could fall by 1 percent. Previously, the association had said it expected sales to be flat with 2024.

VCI Director General Wolfgang Gross Entrup said: "Trump's unpredictable tariff policy, the renewed rise in energy prices and unresolved structural issues continue to create uncertainty."

große Entrup adds that the industry's hopes rest on the new German federal government. After the German election on February 23, VCI form a coalition government as soon as possible to benefit the German economy and industry.

Grosse Entrup said that as the world's third largest economy and the promoter of European industry, Germany must act again. "A radical change in the direction of economic policy is long overdue... Berlin's political decision-makers should be resolute in implementing the much-watched restart plan with a clear approach to economic policy. It is a difficult endeavor but not an insurmountable challenge," he said.

Significant setback in the fourth quarter of 2024

in the fourth quarter of 2024, production excluding pharmaceuticals fell 0.6 percent year-on-year and 6.3 percent sequentially. VCI said chemical pharmaceutical production fell 1.2 percent and capacity utilization fell to 74.7 percent, still below the profitability threshold.

Sales of chemical and pharmaceutical products decreased by 1.5 compared with the fourth quarter of 2023, but increased by 0.3 from the previous quarter to 53.1 billion billion euros. Prices fell 0.2 percent year-on-year.

Domestic sales in Germany continued to decline and overseas sales to European customers also contracted, VCI said, adding that only a "positive push" from outside Europe would be enough to reverse the trend.

"2024 ended with a serious setback for the German chemical and pharmaceutical sectors. The hopes of an industrial economic recovery in Germany and Europe did not materialize," VCI said.

The labor force in this sector remained stable at around 480000, driven by the growth of the pharmaceutical industry.

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