Economic and Legal Factors

WACKER sells its products and services to virtually every industry. Although economic fluctuations cannot be avoided in individual business divisions, their impact and onset may vary greatly. We are, however, able to mitigate the impact of these fluctuations thanks to our product portfolio and broad customer base.


The terms for orders placed with WACKER vary from division to division. Most orders received by WACKER SILICONES are short-term, with a small number of long-term orders. Orders are usually shipped within three months of receipt of order. At WACKER POLYMERS, business is based on contracts and master agreements with terms of up to one year. Around 30 percent of incoming orders are short term. WACKER POLYSILICON’s contracts are short, medium or long term. In certain instances, they include flexible volume-specific escalator clauses. Siltronic usually negotiates orders with the customer from one quarter to the next. As a rule, we aim for fixed contracts with negotiated prices and quantities. Due to varying order-placement procedures at the Group and its divisions, order-level reporting is not very meaningful and hence does not serve as an indicator in our monthly reports.

Operational Metrics as Leading Indicators of Future Developments

By referring to specific leading indicators based on operational metrics, we try to consider potential developments in our business plans and to allocate capacities accordingly. Since our operations are based on diverse businesses and markets, we consult a number of leading indicators to gain insights into potential developments at each of our business divisions. As many of WACKER’s products are destined for the construction industry, we deploy various analytical tools in order to assess future growth in this segment. These tools include WACKER market research, regular talks with customers, forecasts by B+L Marktdaten GmbH and Euroconstruct, and studies of our key national markets.

Leading Operational Indicators


Business Divisions


Leading Operational Indicator


Indicator of:








Raw-material and energy price trends


Our cost trends



Orders received per month


Our capacity utilization



Medium- and long-term contracts


Our capacity utilization, further market trends


Market research, talks with customer


Increase in solar capacity by country, our capacity utilization



Data on chipmakers’ capacity utilization


Our capacity utilization

Every business division


Talks with customers, market research


Our sales trend, our product quality




Market trends, product innovations

Economic Factors Impacting Our Business

The main economic factors influencing WACKER’s business remain unchanged in many areas. Energy and raw-material costs, at around 43 percent of production costs, had the largest impact in 2014.

  • Energy and raw-material costs
    As a chemical company, we belong to an energy-intensive industry and require diverse raw materials to manufacture our products. Consequently, higher energy and raw-material costs impact our cost structure. WACKER is taking steps to become more independent of this factor. By generating our own power at Burghausen and Nünchritz, we are reducing our energy-procurement needs and thereby the cost risk. Regulatory requirements or additional expenses, such as the electricity tax or levies relating to the German Renewable Energy Act (EEG), can affect WACKER’s energy costs both directly and indirectly – for example, through higher grid fees, which lead to increased operating costs for grid operators. However, cost reductions in connection with the EEG levy can have a positive impact on energy costs. As part of our ongoing efforts to improve energy efficiency, we have initiated the POWER PLUS program. The goal is to reduce specific energy consumption by a third between 2007 and 2022. When procuring raw materials, we increase price flexibility by concluding new contracts with shorter terms, with more scope regarding volumes or with regular price adjustments that reflect wholesale market prices.
  • Exchange-rate fluctuations
    The weak Japanese yen against the euro has had a negative impact on Siltronic’s business. As a rule, WACKER hedges against exchange-rate fluctuations. We use currency hedging (derivatives) to secure at least half of our dollar and yen exposures for each subsequent year. The hedging ratio for 2014 was around 50 percent. In determining sensitivity, we simulate a 10-percent devaluation of the US dollar against the euro. Without hedging, an increase in the euro against the US dollar would have negatively impacted EBITDA by € -60 million.
  • State-regulated incentive and feed-in tariff programs for renewable energy sources
    As one of the world’s leading suppliers of hyperpure polycrystalline silicon, we are affected by regulatory changes to incentive and feed-in tariff programs for renewable energy sources. Substantially lower prices for solar modules and cells have greatly increased the competitive advantage of solar energy over fossil fuels and other methods of generating energy. As a result, the solar market’s continued growth has become more independent of state-regulated incentive and tariff programs. At the same time, WACKER has kept its focus on improving productivity in order to maintain its competitive position. Our strong cost position, high product quality, international orientation, wide customer base and medium- to long-term supplier contracts all offer us competitive advantages over other producers.

Legal Factors Impacting Our Business

In 2014, the most negative impact on WACKER’s future operations resulted from anti-dumping and anti-subsidy proceedings instigated by the Chinese Ministry of Commerce against European polysilicon manufacturers. In March of 2014, WACKER and the Chinese Ministry of Commerce (MOFCOM) amicably resolved the issue of polysilicon exports to China, and an agreement to this effect was signed in Beijing. In this agreement, WACKER undertook not to sell polysilicon produced at its European sites below a specific minimum price in China. MOFCOM, in turn, will refrain from imposing anti-dumping and anti-subsidy tariffs on this material. The agreement took effect on May 1, 2014, and is valid until the end of April 2016. Its provisions ensure that WACKER can continue to offer its polysilicon at standard market conditions in China in the future. Both parties agreed to treat the exact terms and details with confidentiality. The agreement has greatly reduced risks to WACKER.

At the same time, China imposed anti-dumping and anti-subsidy tariffs on polysilicon manufacturers in the USA. Polysilicon produced by our Tennessee site, still under construction, could theoretically be affected by these tariffs. Negotiations are currently being conducted between the USA and China with the aim of resolving the trade dispute regarding solar products, which would also benefit WACKER. However, after it starts production in Tennessee, WACKER also has the option of taking up direct contact with China to discuss an exemption from tariffs. The agreement signed by the European Union and China regulating the import of solar modules from Chinese solar companies still applies.

Total of 171 Registration Dossiers Submitted as Part of REACH

According to the EU chemicals regulation REACH (Registration, Evaluation and Authorization of Chemicals in the European Union), we are obligated to register and classify by property all substances exceeding an annual amount of one metric ton. By late 2014, WACKER had submitted 171 registration dossiers to the European Chemicals Agency (ECHA). ECHA requires companies to provide additional information on part of the dossiers submitted in the first and second phase (2010 and 2013, respectively). We processed these requests in 2014. By the end of 2014, ECHA and EU-member-state agencies had jointly designated 161 substances that could be of particular concern for humans or the environment. Thirty-one of these substances are already subject to registration. WACKER has been only marginally affected to date, with only a few purchased substances, and none of its own. As part of the EU Commission’s GHS (Globally Harmonized System of Classification and Labeling of Chemicals), all mixtures (some 7,000) will have been reclassified pursuant to EU-GHS by mid-2015. A central register for hazardous substances has been set up at the ECHA. We had already registered all relevant substances as of 2011.

The ICCA (International Council of Chemical Associations) has developed the Global Product Strategy (GPS), which governs how to assess the properties of chemicals and how to provide information on their safe use. In Europe, most GPS requirements are satisfied by REACH and by CLP (Classification, Labeling and Packaging of Substances and Mixtures). Manufacturers are asked to publish descriptions written in layman’s terms on the safe and environmentally sound use of chemicals (Safety Summaries). By the end of 2014, we had published 75 Safety Summaries on the ICCA chemicals website for the substances we have registered under REACH.