Germany’s chemical association VCI, which represents 1,650 chemical companies such as BASF SE and Linde AG, cut its full-year forecast for revenue and production for the industry as demand from customers in Europe declined.
Revenue is expected to remain unchanged at about 184 billion euros ($230 billion) while production will probably decline 3 percent compared with last year, the Frankfurt-based group said in an e-mailed statement today. Previously the VCI had predicted sales would gain 2 percent and production to remain unchanged.
BASF, the world’s biggest chemical maker, in July cut its estimates for global economic growth and abandoned a prediction for an upturn in the second half. That caution was echoed by Lanxess AG, a maker of synthetic rubber, which said last month that profit would remain unchanged in the second half, indicating that full-year profit would come in at the low end of its target range.
“We’re having to postpone for the time being our hope for a stable upturn in the chemical business,” VCI President Klaus Engel said in today’s statement. “The European Union debt crisis is making itself noticed in the domestic market.”
Customers in Germany as well as other European countries ordered chemicals “cautiously” and chose to destock their warehouses, VCI said. Selling prices in 2012 are still expected to be 2.5 percent higher than last year, the VCI said.
Sales for the industry fell 0.5 percent to 45.2 billion euros in the second quarter compared to the first three months of the year, the association said. Chemical production dropped 2.8 percent, with the biggest decline coming from the producers of basic chemicals.