A slight improvement in sentiment has been observed within Germany’s chemical industry sector, according to data released Tuesday by the Ifo Institute. The business climate index rose to -11.1 points, a modest increase from -12.1 points recorded in August. This indicates a marginally less pessimistic outlook among industry participants regarding future prospects.
Specifically, expectations improved from -4.4 to -2.2 points. However, assessments of the current business situation remained muted, holding steady at -19.5 points.
Anna Wolf, an industry expert at Ifo, suggested that recent government relief measures implemented at the start of September may have contributed to this shift. The reduction in electricity tax and network charges, for example, provides immediate relief for energy-intensive companies, bolstering their competitive standing. Furthermore, planned simplification of supply chain legislation and a more measured approach to EU sustainability reporting are also providing tangible benefits for businesses.
“These steps are fostering greater planning certainty, reducing costs and enhancing the overall conditions for the chemical industry” Wolf stated. “However, a genuine recovery remains elusive.
The sector is presently experiencing production cutbacks and workforce reductions. Capacity utilization has decreased by nearly four percentage points, falling to 73.1 percent. This figure is considerably lower than the average of 82 percent observed prior to 2020. Demand for chemical products continues to decline, alongside a contraction in order backlogs. Even export expectations, which previously offered a glimmer of hope, have now dimmed.