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Business

German chemical industry takes blow from euro crisis

The protracted eurozone debt crisis has also impacted German chemical companies which have seen a decline in orders both at home and abroad. But revenues have dipped only marginally due to rising prices.

Chemical production in Germany dropped 2.8 percent in the second quarter, the industry's umbrella association, VCI, reported on Wednesday. Manufacturers of basic chemicals even logged a 4-percent decrease.

"Our hopes for stable growth in the industry haven't materialized," VCI President Klaus Engel said in a statement. Chemical sector revenues only dipped by 0.5 percent in the second quarter to total 45.2 billion euros ($53.27 billion) as decreasing orders were largely compensated by price hikes.

Engel said the decline in growth figures was mainly due to sinking domestic demand. "Slowly but surely, the eurozone debt crisis is impacting business on the home front," Engel argued. "Many of our customers from German industry have slowed down production and ordered smaller amounts of chemicals."

Bleak outlook

He said the same applied to many clients in the eurozone and the wider 27-member European Union. South America and China were cited as the only bright spots in terms of flourishing markets for German chemical companies.

In total, second-quarter revenues posted abroad rose by 1 percent to 27.9 billion euros, while domestic turnover sank 4.1 percent, reaching 17.3 million euros.

Despite a further expected 2.5-percent price hike in the course of the year, the VCI expects stagnating revenues throughout 2012 and a 3.0-percent decline in overall growth.

hg/msh (Reuters, dpa)