The German Chemical Industry Association (VCI) said at its annual press conference that 2022 is a dark year, and the prospects for 2023 are still bleak.

    Markus Steilemann, chairman of VCI, said: "The situation is very serious. High energy prices, as well as rising prices of raw materials, make the (German chemical and pharmaceutical) industry difficult. Especially our small and medium-sized enterprises are striving for their own future. "

    The huge pressure of energy and raw material costs was accompanied by a strong rise in product prices. The price of chemical products in Germany in 2022 was 22% higher than that in 2021. However, the rise of cost is more drastic than the rise of sales price, which has led to the decline of profits of about 80% of VCI member enterprises, and a quarter of companies have already lost money, especially small and medium-sized enterprises.

    In November, two-thirds of member enterprises suffered losses due to insufficient orders. More than 25% of enterprises even think that their business activities have been seriously affected. For several months, the turnover of the German chemical and pharmaceutical industry has been declining. Nevertheless, the sales volume of Germany's third largest industry in 2022 is expected to reach 266.5 billion euros, 17.5% higher than that in 2021. However, it is worth noting that the sales growth is driven by price, while the sales volume shows a downward trend.

    In order to avoid major losses and save energy (especially natural gas), many companies cut production. 40% of enterprises said that they have done so or intend to take this step soon. Some of the production has been transferred to foreign countries, and almost one in four companies has planned or implemented relocation. In addition, due to the energy crisis, one in five companies had to refuse orders.

    VCI said that about 50% of member enterprises reported supply problems in November. For example, there is a shortage of pigments, carbon fiber and glass fiber, hydrochloric acid, caustic soda, industrial carbon dioxide, etc. The list is becoming longer and longer, and the first value chain is breaking.

    "Chemicals exist in almost all articles used daily. The economic difficulties of the industry will lead to a shortage of supply in all areas of life. " Markus Steilemann stressed that the output of the industry decreased by 6% over the previous year. If the pharmaceutical business is excluded, the decline will even be about 10%. The last similar situation occurred in 2009 after the global economic crisis.

    Despite rising costs, producer prices are under increasing pressure. The orders and sales revenue of the German chemical and pharmaceutical industries are declining. Petrochemical products are particularly affected, and the total output will fall by 15.5% in 2022. Manufacturers of inorganic basic chemicals, polymers and specialty chemicals had to reduce production by nearly 10%. Soaps, detergents and detergents closely related to consumers fell by 1.5%. Only the pharmaceutical industry has improved this year, with output increasing by 3%. In 2022, the employment of the entire chemical and pharmaceutical industry will stabilize at 475500.

    At present, VCI expects that the situation will not improve in 2023 due to the continued high uncertainty. The energy crisis is forcing Germany and Europe into recession. Markus Steilemann explained: "The profitability of the whole industry has deteriorated rapidly in the past year, and the signs of 2023 are extremely bad. The decline of German industrial production will further accelerate, and import pressure will continue to increase. "

    The German chemical and pharmaceutical industry will still face huge challenges next year: lack of orders, supply chain disruption and high energy costs. VCI expects that the output of the whole industry will further decline significantly in 2023, and the sales probability will also show negative growth.