Germany's VCI expects chemicals industry to stagnate in 2025

(Reuters) - Industry lobby VCI expects orders and sales for the German chemicals industry to stagnate in 2025 as high producer prices and low order backlogs weigh on revenue, it said on Friday.

The association, which represents around 1,900 companies, said revenues in the chemical-pharmaceutical industry decreased by 2% to 221 billion euros ($231.34 billion) in 2024, as prices decreased and sales in Germany were down by 4%.

The industry suffered from high production costs and weak demand throughout 2023. Some companies flagged tentative signs of recovery in early 2024, but that optimism has since faded as high costs and labour shortages continue to weigh.

"It's a gloomy assessment. The only silver lining is that the rapid downturn of the last two years has not continued," said VCI President Markus Steilemann, who also serves as chief executive for Covestro.

VCI said orders were scarce in 2024, leading to production facilities not operating at full capacity. "As a result, some facilities have been permanently closed in recent months. Further shutdowns are likely to follow," it added.

Germany is lagging behind other countries due to high production costs and increasing bureaucracy, VCI said, adding that the current economic situation was prompting members to reduce their budgets in Germany and increase investments abroad.

($1 = 0.9553 euros)

(Reporting by Chiara Holzhaeuser and Ozan Ergenay, Editing by Friederike Heine)