Boston, MA -- (ReleaseWire) -- 04/14/2014 -- BMI's latest Germany Petrochemicals Report envisages no increase in ethylene capacity over our forecast period, which will restrict scope for further downstream development. Small-scale capacity is being shut down as German petrochemicals producers seek to cut costs and improve competitiveness. While some basic chemicals plants are being closed, more specialised petrochemicals units are being established, adding value to the production chain.
German output rose by 1.5% in 2013, which was above BMI's forecast of 1.0%, but although the volume of sales increased a decline in unit price saw the value of sales rise only modestly, in line with our expectations. However, petrochemicals output was down by 1.5% and the production of industrial gases, fertilizers and other inorganic base chemicals was also down by 1.5%. Polymers were the positive exception among basic chemicals with a production increase of 3.5%. Domestic market chemicals sales grew by just 1% to EUR75bn with most growth stimulated by exports. Chemical exports and re-exports rose by 2% to EUR165bn while chemical product imports of chemical products stagnated at EUR111bn, leading to a rise in the chemicals trade surplus. Capacity utilisation was 84% overall, but basic chemicals witnessed a decline.
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Over the last quarter BMI has revised the following forecasts/views:
- Growth in chemicals production is set to strengthen slightly to 2.0% in 2014 although, with producer prices likely to fall by 0.5%, industry sales are forecast to rise by 1.5% to EUR191bn.
- The German market is not without risks, with industrial growth faltering towards the end of the year. Nevertheless, the mood is optimistic with expectations of lively orders and sustained development. The German government forecasts GDP to go up by 1.8% this year and by 2.0% in 2015 after an increase of just 0.4% in 2013. BMI is a little more optimistic with GDP growth forecast at 1.9%, accompanied by 2.5% industrial growth.
- The Germany construction industry is set for growth of 1.6% in 2014 following two years of contraction. It is unlikely that there will be a large glut of construction activity, rather it is likely to be just the solid performance we are seeing now. We forecast average growth of only 1.25% y-o-y over our forecast period, 2014-2022. As such, domestic demand for construction-related polymers will remain
- The automotive sector grew by just 0.2% in 2013, and is set to rise by a further 1.9% in 2014, giving solid support to engineering polymers and synthetic rubbers.
- Germany scores 81.8 points and is placed first in BMI's European Petrochemicals Risk/Reward Ratings, unchanged since the previous quarter as a result of market stabilisation and improved export performance which has improved its market risk score. This puts it 8.2 points ahead of the Netherlands.
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