Industrial Chemicals Market – Situation and Trends

An Expert's View about Chemicals in Germany

Posted on: 28 Dec 2011

1. Summary
The European Union’s chemicals market is estimated at a total of EUR 449 billion. Of the EU’s 27
member states, Germany has the largest chemicals market. It contributed about 25% of the EU’s total
chemical production in 2010. In addition, Germany serves as a distribution hub to other EU countries.
Annual sales in the German chemicals market totaled to EUR 171 billion in 2010. The chemical industry
in Germany offers a strong market for innovative U.S. specialty chemicals.

Highly innovative industrial chemicals, pharmaceutical chemicals, industrial biotechnology and nano
materials from the United States have best sales prospects in Germany.

B2B marketplaces, direct purchase and marketing via wholesalers or distributors are the major channels
of distribution in the German chemicals market. German distributors usually prefer long-term business
relationships. Pricing, quality and supplier reliability are major buying factors.

EU and German regulations may apply to chemicals sold in Germany. It is essential for market access
and acceptance that the chemical substances and their labeling comply with the local legislative
framework for chemicals.

2. Market Demand
Germany’s chemicals industry offers a strong market for innovative U.S. chemicals. Good prospects for
highly sophisticated specialty substances can be contrasted to weak prospects for standard or bulk
chemicals. The shutdown of capacities during the financial crisis in 2009, led to local supply outages.
With the improvement over 2010, the situation has changed and most of the plants are close to full
capacity. The positive economic development in 2010, caused a 20% increase of annual sales in the
German chemical industry which totaled to EUR 171 billion in the same year. Demand for specialties and
fine chemicals were particularly strong during the first half of 2011. The highly price sensitive bulk
chemicals, in particular, suffered from the increased crude oil costs minimizing profit margins. Insiders
anticipate annual sales in the German chemical industry to increase by an average of 9% in 2011.

The outlook for the German chemicals market is as follows:

a) Automotive
After its deterioration in 2008, the local automotive industry started to recover during 2010. The figures for the first half of 2011 were likewise encouraging. Demand for chemicals to treat metals has also increased.

b) Pharmaceuticals
After a weak 2010, the total German pharmaceutical chemicals sector has picked up pace in 2011. During the first half of 2011, it grew by 4%. Insiders expect that this trend will continue. Contrary to the downward trend of the overall German chemical pharmaceuticals market during the financial crisis, imports of pharmaceutical chemicals from the United States increased by over 30% from EUR 45,416 million (2009) to EUR 60,158 million (2010). Pharmaceuticals and life science, in particular, offer good market opportunities to U.S. exporters of chemicals.

c) Biotechnology
There are about 400 biotechnology companies headquartered in Germany plus some 138 foreign
companies with German operations. Annual sales in this sector amounted to EUR 2.4 billion in 2010.
Substances generated by the so-called white or industrial biotechnology have grown in importance,
supplying the German chemical industry with a wealth of new possibilities. Over the past few years this
market segment has grown exponentially. The products range from enzymes for detergents and
industrial cleaning to bio-catalyzers for chemical syntheses or substances to treat wastes. Innovations
are developed by biotech companies as well as chemical producers. Only statistics on biotech products
manufactured by German biotech companies are available; their annual sales amounted to EUR 143
million in 2010, an increase of 11% over the previous year.

d) Nanotechnology
Germany is the largest market for nanotechnology in the European Union. Today, approximately 750
German SMEs are active in this market, developing and marketing nano technology and materials. The
latest available estimate of the German nanotechnology market size dates from 2007: EUR 33 billion
(machinery and materials). The German chemicals materials market offers U.S. manufacturers of nano
products excellent market opportunities. Due to the high interest in nano products, the EU Commission is
facilitating local research, i.e., the “Nanoforce” project, a nano research initiative by seven regions in
Central Europe: Italy; Germany; Austria; Slovenia; Slovak Republic; Poland and Czech Republic. It was
launched to foster the development of nano products in Europe.

e) Construction
The German construction sector which has stagnated over the past few years, has started to pick up
pace. Insiders expect that demand for construction products, including construction chemicals, will see
modest growth over the next years. The sudden improvement of the formerly stagnating market may
offer U.S. companies additional sales opportunities.

f) Cosmetics
During the recession, the German cosmetics market has experienced limited decreases in demand. With
2.2%, women’s perfumes received the strongest growth in 2010; followed by decorative cosmetics (2%)
and men’s perfumes (1.2%). In 2011, market insiders anticipate the local cosmetics market to grow by

3. Market Data
Historically, the German chemicals industry has been one of the early indicators of crisis but also of
economic recovery. It supplies all major German manufacturing branches. With the financial crisis
beginning end of 2008, the local chemical market started to decline reaching its low in 2009. In 2010, the
German chemical market saw a fast recovery.

Comparing the statistics on the German chemical market in 2009 and 2010, they reflect how fast the
market recovered after the severe economic downturn. Moreover, German chemical imports from the
United States increased substantially over the same period.

Read the full market research report

Posted: 28 December 2011

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