German chemical industry abandons hope of quick recovery

BERLIN, Sept. 14 (Xinhua) -- The German Chemical Industry Association (VCI) on Thursday predicted that its business situation would further deteriorate in the second half of the year, due to weakening demand.

"Hopes for a recovery will have to be postponed," the association said in a statement. For 2023 as a whole, industry production is expected to drop 8 percent year-on-year. As selling prices are declining, turnover will be 14 percent lower than in the previous year.

"The situation is serious and the mood is correspondingly bad," said VCI President Markus Steilemann. "High energy prices and over-regulation are increasingly getting to the substance of many German companies."

Economic experts believe that Germany will see long-term energy cost disadvantages compared with other industrial locations. If no countermeasures are taken, this will cause a welfare loss of up to 4.5 percent over the next 15 years, according to a recent study by the German Economic Institute (IW) and Frontier Economics.

Following a brief winter recession and another quarter without economic growth, leading economic institutes in Germany recently lowered their forecasts for Europe's largest economy. The country's gross domestic product is now expected to contract by between 0.3 percent and 0.5 percent in 2023.

As one of the biggest industrial energy consumers in Germany, the country's chemical industry has been particularly hard hit by high energy prices. To counter this, Steilemann said a "decisive step" would be an "internationally competitive electricity price" for industry, which would be achieved through a temporary cap.

The German government is already discussing such a national "bridge electricity price," and the European Union (EU) is also looking into the issue.

The chemical industry has welcomed these talks. "We are united by the will to stop deindustrialization," Steilemann stressed.