The performance of the German chemical industry through the prism of geopolitical instability

Abstract

The aggravated energy crisis caused by rising raw materials’ prices significantly reshapes the global chemical industry. The European Union is the second largest market in terms of turnover, lagging only behind the People’s Republic of China. The EU market is dominated by Germany that occupies the leading position in the industry and determines production standards for the entire European community. The industry faces new challenges as it has not yet completely recovered from COVID-19 pandemic. Growing costs for electricity and resources, disruption of supply chains, logistical delays in semi-processed and basic chemicals’ supply as well as diminishing demand lead to crises that are already traceable in the fi rst half of 2022. A fairly capital-intensive, energy-intensive and export-oriented German chemical industry significantly aff ects adjacent industries such as metallurgy, construction, automobile production, agriculture and healthcare. The given article analyses the current state of the German chemical industry and its positioning on the global markets in the context of geopolitical shifts as well as its adaptation to the rapidly changing conditions. The inability to comply with the strict norms of the European Commission within the framework of the green agenda as well as the insufficiency of energy resources are already forcing companies operating in the industry to take desperate measures and deviate from the original standards. Competition against the rapidly growing Japanese chemical industry in the recent years is forcing Germany to undertake critical measures aimed at protecting its share of the global market. Thus, there is a downward trend in production capacities that has a direct impact on the general state of the industry.