In the days before Christmas, there was little festive cheer among companies in the German chemical industry. Not only has the sector experienced a challenging year with an 8% decline in production and a 12% drop in revenue, but the outlook, as per Markus Steilemann, President of the Association of the Chemical Industry (VCI), is also bleak: "We find ourselves in a long, deep valley. And it is still unclear how long we must traverse it". The capacity utilization has remained below the economic threshold of approximately 82% for nine consecutive quarters. The manager emphasized during the association's annual press conference in Frankfurt that this situation has not occurred in previous crises.

Amidst the persistent crisis, Steilemann notes "a gradual trend of investment restraint", which is increasingly leading to the relocation of production capacities to other sites. Following a massive slump in sales this year, the association president foresees a continuing weak demand in key industries such as the automotive and construction sectors for 2024.

Expectations from China are also not optimistic. While economists estimate the country's current economic growth at 4.5% – according to Bloomberg –, Steilemann finds this to be overly optimistic. In any case, the country is expected to face an economic downturn, impacting a crucial demand region. Overall, total orders are anticipated to decline by 3%.

In the concluding year, domestic revenue saw a particularly sharp decline of 16% to €86 billion, while foreign sales decreased by 10% to €144 billion. Despite avoiding domestic market share losses, the decline resulted from reduced sales and lower selling prices. However, internationally, the German industry is losing competitiveness. Primarily due to perennial challenges such as a shortage of skilled workers and an "excessive bureaucracy and regulation," compounded by high energy costs.

Steilemann emphasized the need for an "interim solution" for electricity prices, given that the proposed electricity price package, following the resolution of the budget dispute, merely maintains the status quo. He highlighted the substantial disparity in electricity costs, citing a large consumer paying 15.9 cents per kilowatt-hour in Germany, compared to 4.4 cents in the US and 9 cents in France.

He reiterated the call for an industrial electricity price as a "bridging solution" until structurally lower electricity prices can be achieved. Steilemann expressed doubts that the necessary measures have already been taken, questioning the feasibility of building the required 30 to 50 gas power plants by 2030 to increase electricity generation. Consequently, the industry fears that electricity prices will be rising further, instead of falling, with increasing demand and a simultaneously insufficient supply.

Based on calculations by the VCI, about 70% of companies are responding to cost increases with efficiency measures, while 48% are intensifying their innovation efforts. Nevertheless, the pressure is challenging to offset. In 2023, half of the companies experienced a decline in profits, with 38% facing a "significant" decrease, and 14% incurred losses.

The industry feels "abandoned by politics," lamented Steilemann, calling for an immediate change in policy, especially in order to retain crucial parts of the value chain in Germany.