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Boston, MA -- (SBWIRE) -- 05/08/2013 -- The German chemicals market, which accounts for a quarter of EU sales, will be pivotal to growth in overall European chemicals production. Indeed, the slowdown in domestic demand will inevitably lead to a reduction in imports. As a result, European producers cannot bank on German demand to compensate for weaknesses elsewhere in the EU market, and many will fail to match the competitiveness of the country's diverse and highly integrated petrochemicals industry. Meanwhile, key growth drivers in the German industry will be in high-end specification plastics and speciality chemicals, rather than the basic chemicals and polymers traded by producers in the Gulf region. This should, in due course, spur investment into the expansion of existing capacity and increase research and development, with a focus on German operations.
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The performance of the German chemical industry in 2012 was below BMI's expectations with zero growth in domestic sales and a 3.0% decline in output. The sector was adversely affected by the ongoing Eurozone sovereign debt crisis as well as the slowdown in the wider global economy. However, a 2.5% rise in prices enabled the chemicals industry to maintain overall revenues at around EUR184bn, even while domestic sales declined 2.5% to EUR73.3bn. A contraction in the domestic market was counteracted by improved performance in markets outside the EU, leading to 2.0% growth in exports to EUR111bn, a new record for the industry. Growth came primarily from demand in Asia, the US and South America.
Over the last quarter BMI has revised the following forecasts/views:
- Germany scores 81.8 points and is placed first in BMI's Western European Petrochemicals Risk/Reward Ratings (RRRs), up 0.4 points since the previous quarter as a result of market stabilisation in Q412 and improved export performance which has improved its market risk score. This puts it 7.9 points ahead of the Netherlands.
- The demand situation should pick up in Q113 due to low inventories. Furthermore, petrochemicals producers are likely to bring forward their purchases to overcome constrained feedstock supply amid shutdowns.
- BMI has downgraded its production growth forecast from 2-3% to 1.5% in 2013 due to domestic market stagnation.
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