Chemical majors mull shutdowns, cut in run rates as Germany enters recession in Q3

24-Nov-08

Accounting for 25% of the region's chemical output, Europe's largest chemical producer- Germany has entered into a recession in the third quarter of this year. Also, 10% of their sales are from the global automotive industry alone that is currently staggering under the global economic crisis, the industry players will be compelled to reconsider production. This makes it inevitable for its chemical makers to fortify themselves for harder times- probably follow in the footsteps of BASF that has unveiled plans to temporarily shut down 80 plants worldwide and cut production at a further 100 sites. Bayer seems poised to suspend production at its plastics and foams unit should demand weaken further, but should be able to cope with the crisis better than most as barely 305 of sales comes from chemicals, and the balance 70% comes from drugs and farming pesticides. Lanxess, a specialty chemicals supplier spun off from Bayer in 2005, plans to cut back on capacity. Government-controlled company Evonik, which makes about 75% of its sales from chemicals, Henkel and Sued-Chemie do not currently plan any production curbs.