Production has increased but revenues have fallen. Germany’s chemical industry is simply not emerging from its sorrowful state. In its report for Q3 2023, German chemical industry association VCI (Frankfurt; www.vci.de) writes that “hopes for an improvement at the end of the year are fading”.

While the situation would seem to have bottomed out, no signs of a trend reversal are in sight. High energy and raw material prices and a lack of orders both from home and abroad are still weighing heavily on business, the association says. 

“Our companies are therefore being forced to put the brake on costs – by shutting down production plants, discontinuing individual business areas, or shifting investments abroad”, reports VCI president Markus Steilemann who, in his actual job as CEO of speciality chemicals manufacturer Covestro, is feeling the full misery of the chemical industry’s situation in his own company.

Related: Covestro’s 2023 core profit seen at low end of target despite 23% drop in Q3 sales

For 2023 as a whole, VCI is still expecting an 8% fall in production, although third-quarter output rose slightly by 1.7% compared with the previous quarter for the first time in eighteen months. The year-on-year decline of 8.4% has, however, had a significant impact.

Since customers are still holding off on placing orders, industry sales (including the pharmaceutical sector) fell by a further 0.3% in the third quarter to stand at EUR 54.8 bn. Although the decline is slowing down, the sector’s sales for 2023 as a whole are expected to fall by some 14%, the VCI writes.

Capacity utilisation at production facilities declined once again with a rate of only 75.7% (77.3% in same quarter of the previous year).

Employee numbers have remained largely stable to date at just under 480,000. While the VCI reports that employment has already fallen in large sections of the chemical industry, short-time working has so far been able to prevent “more incisive reactions by companies to the difficult business situation”.

Related: Bankruptcies at major German plastics firms up 25% from 2022

The industry association is convinced that companies are not currently expecting the situation to improve in the course of this year. “Business will remain difficult in the winter too”, writes the VCI.