German chemicals groups boost prices as Iran war adds to industry woes

{"text":[[{"start":10.53,"text":"Germany’s biggest chemical companies are hiking prices as they struggle with surging energy prices owing to the war in Iran, threatening to accelerate the deindustrialisation of Europe’s largest economy."}],[{"start":24.71,"text":"BASF, the largest in the region, this week said it would increase European prices for standard amines used in products such as detergents and coatings by about 30 per cent, while speciality chemicals group Lanxess is raising the cost of some materials by as much as 50 per cent. "}],[{"start":44.2,"text":"They are among groups including Wacker Chemie, Covestro and Evonik that have either raised prices for building block chemicals, preservatives and polymers, or told customers that they intend to do so, since Israel and the US attacked Iran at the end of February."}],[{"start":63.64,"text":"The rush to boost prices highlights intensifying pressure on the industry — a key driver of Germany’s industrial output — though some companies could get a short-term competitive boost over Asian peers who have a higher dependency on the Gulf for raw materials such as naphtha and methanol. "}],[{"start":82.84,"text":"“No one knows how long this situation will last, but every day is one too many,” said Wolfgang Große Entrup, chief executive of the German chemicals lobby VCI Wolfgang, adding that rising costs for raw materials threaten the long-term competitiveness of European chemical producers. "}],[{"start":103.37,"text":"The war presents a new challenge for a sector that has been struggling since Russia’s full-scale invasion of Ukraine caused a surge in energy costs. Companies have reacted by cutting 20,000 jobs since 2022 and reducing investment at home."}],[{"start":122.81,"text":"Germany could lose “entire industrial clusters” and suffer “chaotic deindustrialisation” without support for the sector, Michael Vassiliadis, head of the IGBCE chemicals and energy union, warned this month. "}],[{"start":138.46,"text":"Lanxess said it would raise prices for flame retardants by up to 35 per cent and boost the cost of plasticiser additives, used to make plastic material more durable and flexible, by as much as 50 per cent. "}],[{"start":153.56,"text":"Wacker Chemie said it planned to raise the prices for its silicone and polymer products, such as resins and plastic powders, without specifying by how much, while Covestro and Evonik have also raised prices."}],[{"start":167.95,"text":"The challenging conditions have also driven European producers to invest in other regions. BASF, which operates in 93 countries, opened its second Verbund chemical production plant in China on Thursday. It has also announced job cuts in Germany."}],[{"start":null,"text":"

"}],[{"start":186.63,"text":"Cologne-based Lanxess said its decision to raise prices reflected “cumulative cost increases” including “for energy, critical raw materials, and logistics amid ongoing geopolitical tensions”. "}],[{"start":202.93,"text":"Its shares rose over 40 per cent in the past week on speculation that rising prices will boost its earnings, while Asian competitors struggle with shipping disruptions in the Gulf region."}],[{"start":216.41,"text":"But it is unclear how durable the benefits will be for companies facing higher energy costs. They also face increased shipping costs and a potential shortage of inputs from Asia."}],[{"start":228.84,"text":"Companies were “just seeing some slight positive growth . . . and now this comes”, said Iris Herrmann, partner at consultancy Oliver Wyman. "}],[{"start":237.72,"text":"“Everyone [was] thinking in scenarios already, because nothing was straightforward anymore. And now you basically pull the worst-case scenario and that’s the new base case,” she said."}],[{"start":249.87,"text":"Evonik chief executive Christian Kullmann said in a statement that it was “too early to quantify” the impact of the Middle East crisis on the company, though it could take a hit from a slowdown in the global economy. "}],[{"start":262.62,"text":"“In some business areas, it should be possible to pass these costs on to our customers, at least partially, but certainly not in all,” he said. "}],[{"start":273.02,"text":"German demand for building block chemicals used to make products such as polyester textiles and food packaging was already low and suppliers “cannot forward the cost increase to their buyers”, said Anna Wolf, research specialist in the chemical industry at the Ifo Institut."}],[{"start":291.46,"text":"Producers of speciality chemicals with specific uses could have more room to raise prices because competitiveness in that segment was determined “not by the price but by the quality”, she added. "}],[{"start":314.73999999999995,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1774855943_7486.mp3"}