March 1 (Bloomberg) -- Germany’s VCI chemical association, which represents companies including BASF SE and Evonik Industries AG, cut its full-year forecast for sales and production on lower expectations for economic growth.
Production will probably stagnate this year, while sales will gain 1 percent on higher selling prices, the Frankfurt-based association said in a statement today. That compares to a December forecast for production to rise 1 percent and sales to increase 2 percent.
“The economic fog is still relatively thick,” said Utz Tillmann, president of the VCI. “Uncertainties tied to the sovereign debt crisis in Europe and the U.S. as well as repeated retraction of growth forecasts by the research institutions is putting pressure on sentiment in the chemical industry.”
BASF, the world’s biggest chemical maker, surprised analysts including Oliver Schwarz of M.M. Warburg and Peter Spengler of DZ Bank by predicting last week that earnings and sales will rise again this year. Economic growth in emerging economies such as Brazil, Russia, India and China will drive revenue in the industry, VCI said.
For next year chemical production will probably increase 2 to 3 percent as the long-term perspectives are promising, the group said. Prices for primary chemicals, except propylene, as well as naphtha were “slightly” higher so far this year compared with the final quarter in 2011, VCI added.
In the fourth quarter the chemical industry unexpectedly suffered as customers emptied inventories at the end of the year, the association said. Chemical production excluding pharmaceuticals dropped 6 percent, while sales gained 1.8 percent on prices that were on average 4.7 percent higher from a year earlier, VCI said.
To contact the reporter on this story: Sheenagh Matthews in Frankfurt at email@example.com
To contact the editor responsible for this story: Benedikt Kammel at firstname.lastname@example.org