CAPTION: German chemical industry cuts production due to high energy prices. (icture alliance/dpa)
The German chemical and pharmaceutical industry is continuing to cut back on production due to the sharp rise in energy prices. In the third quarter, production shrank by 10.3 percent compared to the same period last year, the German Chemical Industry Association (VCI) reported in Frankfurt. Production in the chemical industry alone (excluding pharmaceuticals) even fell by 14.1 percent. For the year as a whole, the association still expects the chemical and pharmaceutical sectors to produce 5.5 percent less than in 2021, with a minus of 8.5 percent forecast for the chemical industry alone.
"The chemical sector is facing further dark months," said the new VCI president Markus Steilemann. He added that many companies are already in an extremely dramatic situation with their production in Germany, primarily because of the massive increase in energy costs. Small-and-medium-sized companies in particular are having considerable problems concluding extensions or new contracts when supply contracts for electricity or gas expire. With the onset of winter and falling gas storage levels, the situation is set to worsen.
The chemical and pharmaceutical industry, with more than 473,000 employees, is particularly affected by the energy crisis. According to earlier information from the association, the sector is Germany's largest gas consumer with a share of 15 percent, accounting for just under a third of industrial consumption. It needs gas as a source of energy and as a raw material for further processing - for example in plastics, pharmaceuticals, and fertilizers.
The industry is also suffering from strained supply chains and the weakening economy. As a supplier to the automotive, consumer goods, and construction industries, the chemical industry is particularly dependent on state of the economy. Compared with the previous quarter, production in the chemical and pharmaceutical sectors fell by 4.2 percent in the third quarter, while sales contracted by 1.6 percent to 63.1 billion euros. By contrast, year-on-year turnover rose by 14.7 percent due to higher prices.
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