Germany's chemicals sector sees signs of recovery as demand picks up
15/05/2024 13:48
By Tristan Veyet and Bartosz Dabrowski
May 15 (Reuters) - After a couple of tough years, some
German chemicals makers saw signs of recovery in orders and
volumes in the first quarter, driven by the improving economic
situation and higher demand outside of Europe.
The industry in Germany, Europe's largest chemicals
producer, suffered heavily throughout 2023 due to high
production costs and weak demand amidst high inflation.
But some groups flagged growing demand in the January-March
quarter, with speciality chemicals maker Evonik EVKn.DE
reporting a rise in sales volumes for the first time in two
years, and Wacker Chemie WCHG.DE beating profit expectations
thanks to an increase in orders.
Potash and salt miner K+S SDFGn.DE said stronger demand at
the start of the year raised its likelihood of reaching the
higher end of its 2024 guidance.
"The picture that emerges for European chemicals following a
tough 2023 is of a grinding, periodically inconsistent
recovery," Berenberg analyst Sebastian Bray told Reuters in an
email.
"Demand ... seems to have improved to the point that I would
expect 2024 industry utilisation to rise well beyond the
estimated low-mid 70s percent that characterised much of 2023,"
Bray added.
Germany's chemicals industry association VCI raised its
outlook for the year on Wednesday, saying it expects production
volumes including pharmaceuticals to rise by 3.5%. It had
previously expected flat volumes with overall industry sales set
to rise by 1.5%.
VCI said growth in the first quarter was driven mainly by
orders from non-European markets, led by China. It expects
German domestic orders to pick up slightly in the second half of
the year.
The lobby's forecast echoes the Ifo economic institute's
latest barometer for Germany's chemical industry, which improved
slightly in April, with companies expecting higher orders from
abroad and to expand production in the coming months.
"From my point of view, the situation is set to improve from
here on, based on slowly increasing demand in many sectors,"
Warburg Research analyst Oliver Schwarz said.
(Reporting by Tristan Veyet and Bartosz Dabrowski in Gdansk;
Editing by Milla Nissi)
((Tristan.Chabba@thomsonreuters.com;))