Germany’s VCI Cuts 2014 Chemical Forecasts on Geopolitical Risks

Germany’s VCI chemical trade group said sales and production this year will be lower than previously anticipated as industrial customers curb production because of geopolitical risks.

The chemical industry’s sales will probably rise 1 percent to 192.5 billion euros ($252.7 billion) this year with production gaining 1.5 percent, the Frankfurt based VCI said today in an e-mailed statement. The group had earlier predicted a gain in sales of 1.5 percent and an increase in production of 2 percent.

VCI, which represents 1,650 German chemical companies including BASF SE and Lanxess AG, said the industry suffered as domestic industrial production declined and geopolitical risks increased client uncertainty in the three months through June.

“The German chemical industry had to cope with an economic setback in the second quarter,” Karl-Ludwig Kley, president of the VCI, said in the statement. “We expect a slight revival in demand in the second half if there is no escalation of the geopolitical situation.”

Chemical selling prices will probably decline 1 percent this year instead of a previously forecast drop of 0.5 percent, the VCI said today.

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