Germany's VCI expects chemicals industry to stagnate in 2025

Adds conference call, Evonik job cuts in paragraphs 6-7

By Chiara Holzhaeuser and Ozan Ergenay

Dec 13 (Reuters) - Industry lobby VCI said on Friday it expects German chemicals industry orders and sales to stagnate in 2025 as high producer prices and low order backlogs weigh on revenues.

The association, which represents around 1,900 companies, said revenues in the chemical-pharmaceutical industry decreased by 2% to 221 billion euros ($231 billion) in 2024, as prices decreased and sales in Germany were down by 4%.

The industry suffered from high production costs and weak demand throughout 2023. Some companies flagged tentative signs of recovery in early 2024, but that optimism has since faded as high costs and labour shortages continue to weigh.

"It's a gloomy assessment. The only silver lining is that the rapid downturn of the last two years has not continued," said VCI President Markus Steilemann, who also serves as chief executive for Covestro 1COVG.DE.

VCI said orders were scarce in 2024, leading to production facilities not operating at full capacity. "As a result, some facilities have been permanently closed in recent months. Further shutdowns are likely to follow," it added.

In a conference call, VCI president Steilemann said he expected the number of jobs in the sector in Germany to fall in 2025, without giving further details.

Earlier on Friday, German chemicals maker Evonik EVKn.DE said it might cut its workforce by more than a fifth.

Germany is lagging behind other countries due to high production costs and increasing bureaucracy, VCI said, adding that the current economic situation was prompting members to reduce their budgets in Germany and increase investments abroad.

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(Reporting by Chiara Holzhaeuser and Ozan Ergenay, Editing by Friederike Heine and Alexander Smith)

((Chiara.Holzhaeuser@thomsonreuters.com;))