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.

Pandemic Hits the Chemical Industry

Due to the coronavirus pandemic, global chemical-industry sales fell in the first half of 2020. A recovery started in the summer and lasted until year-end. Demand for chemicals and pharmaceuticals stabilized. According to the German Chemical Industry Association (VCI), the chemical industry’s global sales (including pharmaceuticals) totaled €5.1 trillion in 2019, with Asia accounting for over 50 percent. In recent years, the centers of growth have shifted increasingly toward emerging markets. Investment activities are intensifying in countries with low energy and raw-material costs. Europe benefits from these growth markets through foreign trade. This trend continued in 2020.

For Germany’s chemical industry, 2020 was a difficult year. Based on VCI figures, sales in this sector, Germany’s third-largest industry, contracted 6 percent to €186 billion (2019: €193 billion). The pandemic-related decline in orders impacted not only international business in nearly every export market (-6.5 percent), but also sales in Germany (-5.5 percent). Production fell 3 percent. The chemical industry alone, excluding the almost stable pharmaceutical sector, saw a 4 percent drop.

Construction Expenditure Decreases

Even though other economic sectors were hit much harder by the coronavirus pandemic, the construction industry was not spared in 2020. Projects were delayed and investment spending postponed. According to market research institute B+L Marktdaten GmbH, construction expenditure fell in nearly all markets. Globally, construction volume decreased by -2.3 percent to US$9.11 trillion (2019: US$9.32 trillion). The strongest drop was in South America at -6.4 percent. But in Western Europe, too, construction volume was significantly below the prior-year level (down 5.5 percent).

Growth Rate in Construction by Region in 2020

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Electrical and Electronics Industry Posts Decline

According to estimates of Germany’s Electrical and Electronic Manufacturers’ Association (ZVEI), the global electrical and electronics market declined 3 percent to about €4.37 trillion in 2020 (2019: €4.51 trillion). While the pandemic caused a drop of around 7 percent in advanced economies, the decline in emerging-market countries was comparatively moderate at 1 percent.

Photovoltaics Pivotal to Global Energy Supply

The global solar industry expanded further in 2020. Various market studies and our own market surveys show that some 140 gigawatts (GW) were newly installed worldwide (2019: about 120 GW). That was around 17 percent more than the year before. The amount of installed PV capacity worldwide exceeded 700 GW at year-end 2020. About half of the new capacity in 2020 was added in China, Japan and the USA. Global PV markets thus grew year over year despite the pandemic’s negative impact. Key factors in the global expansion of PV installations were incentives coupled with substantially lower system costs. Today, photovoltaics are already competitive compared with electricity generated from conventional energy sources. The non-incentivized cost of solar energy has continued to fall. In several solar auctions in sun-rich regions, the electricity-trading price was down to below US$15 per megawatt hour.

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 China, year-over-year growth was stable despite the difficult underlying conditions. Strong competitive pressure persists throughout the supply chain.

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

Raw-Material Prices Decline Year over Year

In 2020, raw-material prices were lower on balance than a year earlier, with prices developing differently for certain materials. Price trends reflected pandemic-driven demand shifts, which were sometimes abrupt. Entire supply chains were impacted. After rising at the start of the year, metallurgical-grade silicon prices fell in the second and third quarters due to lower demand, particularly for aluminum applications. Prices then recovered toward year-end. Ethylene prices in Europe were largely determined by naphtha, which is the main cost factor, and thus by the price trend for crude oil. Methanol prices dropped steeply until mid-year, reflecting not only the buoyant supply situation, but also movements in coal and oil prices, which are decisive for methanol pricing. Subsequently, prices climbed strongly due to higher precursor prices and lower volume availability. The trend for vinyl acetate monomer was similar. Prices initially fell due to both weaker demand amid the pandemic and lower prices for upstream products, before picking up in the second half-year.

Electricity and CO₂ Prices Fall

The coronavirus pandemic triggered a pronounced but temporary drop in prices for WACKER’s key energy sources in spring 2020. On the global crude oil market, prices fell to a three-year low amid the demand slump. After OPEC cut production and the pandemic-related restrictions eased, prices recovered slowly during the year, but did not reach their previous level. Germany’s electricity prices initially continued dropping, impacted by historically low gas and coal prices, by high feed-in levels of renewable electricity and by lower industrial demand. They then stabilized during the year at a price of around €40/MWh. Electricity prices reached their annual high at year-end, driven by soaring gas, coal and CO₂ prices. Electricity prices in Germany are also subject to levies and fees, including grid fees, electricity taxes and the German EEG surcharge for renewables.

Prices for CO₂ emission allowances fell to a daily low of around €16 per metric ton in the first quarter. Then, a nascent recovery lifted daily prices above €30 per metric ton for the first time in more than ten years. In the second half of the year, prices initially stabilized at around €25 per metric ton, before surpassing €30 per metric ton in December. The overall price trend showed significant volatility.

Market-Price Trends for Energy Sources Relevant to WACKER