Chemicals

The German chemical industry does not consist entirely of large, household name companies. In total there are in Germany nearly 1,900 chemical businesses. Some 90 percent of these undertakings are small and mid-sized enterprises (SMEs) with under 500 staff. SMEs employ almost two thirds of the chemical industry workforce and contribute over one fourth to total chemical industry sales. Different to other industries, most chemical SMEs are not suppliers but customers of large businesses.

With an average growth rate of 2.2 percent in the period from 1994 to 2004 the chemical output increased faster than the output of the manufacturing industry as a whole that went up, in real terms, by 1.8 percent per annum.

Ranking behind the USA and Japan but before France, China and Italy, Germany is the third largest chemical manufacturer worldwide. However, chemical consumption and output are growing particularly fast in China, India and other Asian countries.

As a result of the booming global economy, chemical business in Germany improved noticeably in the course of 2004. The German chemical industry achieved total sales of ca. 141.2 billion euros, exceeding the level of 2003 by 3.5 percent. The chemical output went up, especially in the 2^nd half of the year. Also higher producer prices contributed to the sales increase. Producer prices climbed continuously throughout 2004 and were, on the annual average, 1.0 percent higher than back in 2003. Due to rising raw material costs, prices rose significantly in sectors closely connected with crude oil. In other sectors, price increases came to a halt in late 2004. Exports grew dynamically by 15 percent to just under 100 billion euros. Imports rose roughly to the same extent.

In early 2005 the recovery initially continued but somewhat lost in force in the 2nd quarter of this year. Compared with a weak 1st half 2004, output and sales clearly improved by 6 percent and 7.5 percent, respectively, from January to June 2005. The strong upward movement of prices stopped in April. Domestic sales improved. Exports continued to benefit from the growing demand abroad but did not increase to the same degree as in 2004.

Upward trends will further lose in momentum in the remainder of 2005. The year 2005 as a whole will see an output improvement by 2.0 to 2.5 percent. Due to persistent tension on world raw material markets, producer prices will rise on average by ca. 3 percent in the present year. Total sales of the German chemical industry will increase by 4.5 percent. Impulses come from business with foreign customers, together with a slightly higher domestic demand.