Sector-Specific Conditions

We supply products to a wide range of industries. Our main customers are in the chemical, construction, electrical, electronics and photovoltaic sectors.

Chemical Industry Grows Globally

In 2019, the chemical industry performed well worldwide. Its growth focus is steadily shifting to emerging markets – especially toward Asia. Investment activities are intensifying in countries with low energy and raw-material costs. Europe is benefiting from these growth markets through foreign trade. According to the German Chemical Industry Association (VCI), global chemical sales (including pharmaceuticals) totaled €4.6 trillion in 2018, with Asia accounting for more than 50 percent.

For Germany’s chemical industry, 2019 was a difficult year. Based on VCI figures, sales in this sector, Germany’s third-largest industry, contracted by 5.0 percent to €193 billion (2018: €204 billion). The global economic downturn and US-China trade tensions impaired the industry’s international business, while domestic chemical demand from industrial customers also declined. As a result, total production in Germany’s chemical/pharmaceutical industry fell by 7.5 percent. Capacity utilization at German chemical plants was about 83 percent in 2019.

Construction Industry Grows in 2019

The construction industry performed well in 2019. According to market research institute B+L Marktdaten GmbH, global construction expenditure rose by 2.0 percent to US$9.32 trillion (2018: US$9.14 trillion). In regional terms, the construction sector’s performance diverged across individual markets: construction expenditure grew in Asia, Western Europe and North America, but declined in South America and Eastern Europe.

Growth Rate in Construction by Region in 2019

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Electrical and Electronics Sector Expands in Emerging Market Economies

According to the German Electrical and Electronic Manufacturers’ Association (ZVEI), the global electrical and electronics market grew 4 percent to about €4.56 trillion in 2019 (2018: €4.42 trillion). The main impetus came from China and emerging markets, which added around 6 percent and 5 percent, respectively.

Photovoltaics Pivotal to Global Energy Supply

The global solar industry posted continued growth in 2019. Various market studies and our own market surveys show that some 120 gigawatts (GW) were newly installed worldwide (2018: about 105 GW). That was about 14 percent more than the year before. The amount of installed PV capacity worldwide thus exceeded 600 GW at year-end 2019. About half of the new capacity in 2019 was added in China, India, Japan and the USA. Although changes in China’s incentive policies caused newly installed capacity there to decrease from 44 GW in 2018 to 30 GW in 2019, the drop was offset by strong growth in many other markets.

Despite the global rise in new installations, conditions in the PV industry remained challenging. In the USA and India, punitive tariffs on imported solar cells and modules are pushing up prices, impeding growth in those markets. In China, expectations of a pick-up in growth were put off until 2020. Due to the high excess capacity built up by Chinese manufacturers, price pressures persisted across all stages of the supply chain. As a result, numerous solar companies failed to achieve any full-year improvement in their financial situation.

Market-Price Trends for WACKER’s Key Raw Materials in Europe

Raw-Material Prices Decline Year over Year

Overall, raw-material prices were lower in 2019 than a year earlier. Silicon-metal prices in Europe started tumbling in the second quarter before bottoming out in the fourth. One reason was slowing demand due to high inventories and lower volumes, particularly for aluminum alloys. At the same time, excess capacity in China put pressure on global prices, causing temporary shutdowns at silicon-metal plants in Europe. Ethylene prices in Europe were largely determined by naphtha, which is the main cost factor, and thus by the price trend for crude oil. The price of methanol dropped steeply during the year as a result of ample supply, as well as changes in coal and oil prices, which are decisive for methanol pricing. After a strong climb in 2018, the price of vinyl acetate monomer decreased markedly in 2019.

Electricity and CO₂ Prices Rise

In 2019, the prices of WACKER’s key energy sources increased markedly versus the prior year. On the global crude-oil market, prices rose due to OPEC supply cuts and geopolitical tensions, before weakening again. High CO₂ prices and discussions about a potential coal exit caused electricity prices to climb in the first half of 2019. As the year progressed, electricity prices came under pressure amid historically low gas and coal prices, and slackening industrial demand. A hot summer and the limited planning horizon for electricity from renewables caused strong price fluctuations during the year. In Germany, electricity prices are subject to high levies and fees, including grid fees, electricity taxes and the German EEG surcharge for renewables.

After climbing steeply in 2018, prices for CO₂ reached an 11-year daily high of €29 per metric ton in July 2019, before stabilizing in the second half-year at around €25 per metric ton. The price trend showed significant volatility.

Market-Price Trends for Energy Sources Relevant to WACKER