Key insights
- German chemicals lobby warns that recent order increases are due to supply chain disruptions and not sustainable growth. High energy costs and competition from Asia continue to plague European producers. This suggests continued headwinds for European manufacturing, potentially impacting global supply chains and contributing to inflationary pressures, indirectly affecting US equities.
Investing.com -- Germany’s chemicals lobby VCI cautioned on Tuesday against interpreting recent increases in sector order books as signs of recovery, stating the uptick stems from customer panic rather than sustainable growth.
"This is a small peak in a structural crisis we are facing," said VCI Managing Director Wolfgang Grosse Entrup at the Handelsblatt Annual Chemical Industry Conference in Berlin.
Europe’s chemicals industry saw an unexpected boost in the first quarter due to the Iran war, which caused supply disruptions that increased costs for Asian competitors and led customers to prioritize reliability over price.
Entrup identified the energy crisis as the industry’s Achilles heel and urged politicians to speed up reforms aimed at improving German competitiveness.
European producers have faced challenges for years, including high energy costs, weak demand and intense price competition from Asian rivals.
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