Friday, September 30, 2022

Whoa, German chemical plant utilization is way down

From this week's C&EN, grim news from the chemicals sector (emphasis mine, article by Michael McCoy): 
...A day later, Dow’s chief financial officer, Howard Ungerleider, told a Credit Suisse conference that Dow’s third-quarter earnings before taxes would be about $600 million below what stock analysts were expecting.

Like other executives, Ungerleider pointed to lower demand and higher energy costs in Europe as key reasons for the reduced outlook. Although no major German chemical company has formally cut its outlook yet, a recent report from VCI, Germany’s main chemical industry association, is grim in its predictions. It warns that business consequences of the war in Ukraine—high energy and raw material costs, persistent supply bottlenecks, and possible natural gas rationing—could bring production cutbacks and even a recession.

The group says that production capacity utilization in the German chemical industry is 81.4% below normal and that output is likely to fall by 8.5% in 2022.

“The immense challenges are a serious danger to the competitiveness of our companies and thus also to the future of Germany as an industrial location,” VCI president Christian Kullmann writes in the report. “Cutting back production is a first step. If certain processes have to be shut down altogether, they may never start up again.”

It will be interesting to see what the long-term ramifications to the European chemical industry will be from the Russian invasion of Ukraine. I am not sure I would have predicted this, but here we are.  

1 comment:

  1. natural gas is not just hydrogen/syngas source but also a fuel for steam generators that provide heat source for columns and reactors throughout the plant.


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