A slight improvement in sentiment has been observed within Germany’s chemical industry sector during September, according to data released Tuesday by the Ifo Institute. The business climate index rose to -11.1 points, a marginal increase from -12.1 points recorded in August. This indicates a lessening in overall pessimism among companies looking ahead.
Future expectations demonstrated a more pronounced shift, rising from -4.4 to -2.2 points. However, the assessment of the current situation remains considerably negative, holding steady at -19.5 points.
Anna Wolf, an industry expert at the Ifo Institute, suggested recent government measures may be contributing to the slight shift in perception. “The relief packages introduced at the beginning of the month could have sent an important signal to the chemical industry within this challenging environment” she stated. Specifically, reductions in electricity tax and grid fees are expected to directly improve the competitive landscape for companies relying heavily on energy. Planned simplifications to the supply chain act and a more moderate implementation of the EU’s sustainability reporting requirements are also providing tangible relief to operations.
“These steps create planning certainty, reduce costs and improve the competitive conditions for the chemical industry” Wolf explained. “However, a genuine recovery cannot yet be declared”. The sector is currently marked by production cutbacks and workforce reductions. Capacity utilization has fallen by approximately four percentage points to 73.1%, significantly down from an average of 82% prior to 2020. Demand for chemical products remains in decline, while the volume of incoming orders continues to diminish. Even exporter expectations, which previously showed signs of promise, have once again clouded.
