German Chemical VCI Sees Strong Final Quarter After Destock

Germany’s VCI chemical association, which represents companies including BASF SE and Lanxess AG, forecast a “strong” fourth quarter as customers refill inventories they had allowed to empty amid turbulence in financial markets and the debt crisis in the U.S. and Europe.

Some clients destocked on the chance of getting better prices, the Frankfurt-based association said in an e-mailed statement today. VCI reiterated a forecast for full-year chemical production to increase about 5 percent and industry sales to rise 10 percent.

“The order situation in the German and European industry is still good,” VCI said in the statement. “Especially the auto and machine-building industries expanded production again. As a result, the chemical industry probably grew in the third quarter, meaning stock rooms must be almost depleted.”

BASF Chief Executive Officer Kurt Bock said last week that the world’s largest chemical maker is keeping a close watch on inventories. Companies are becoming more cautious about their growth opportunities, a sentiment Bock said is healthier than powering ahead as global economic prospects diminish.

The CEO, speaking on a conference call with analysts on Oct. 27, said the last three months of the year will be “pretty hard to read” as BASF and other companies try to “optimize” inventories.

Bock gave a bleaker forecast for global economic growth next year, predicting a slowdown, when BASF reported third-quarter earnings that beat analyst estimates the same day.

Sales by German chemical companies dropped 1 percent to 44.5 billion euros ($61 billion) and production fell 2 percent in the third quarter compared with the previous three months, VCI said. Prices gained 0.4 percent, it said.