Sector-Specific Conditions

In 2023, economic trends in the industries relevant to our business will continue to be affected by the war in Ukraine. The combination of the energy crisis, high raw-material costs and an ongoing shortage of materials is likely to weaken overall industrial output, while inflation, rising interest rates and unabated geopolitical risks will also weigh on consumption and investment spending.

Slight Growth for the Chemical Industry

After slowing in 2022, chemical industry growth is likely to weaken further in 2023. The German Chemical Industry Association (VCI) expects global chemical production (excluding pharmaceuticals) to grow by only 0.4 percent in 2023. According to the VCI, chemical and pharmaceutical production in Germany will contract markedly. Sales are also likely to decline. Beyond this, the VCI is not providing a quantitative forecast for 2023 due to the highly volatile environment.

Given the ongoing uncertainties, risks for WACKER’s chemical divisions remain. But the strength of our broad product portfolio has already proved itself in the crises of recent years. Despite the current dip in demand in some areas – such as the construction industry – we expect WACKER to continue growing in many markets with its specialty chemical products. That applies in particular to energy, electromobility, pharmaceutical and medical applications, and to label manufacturing, where we are benefiting, for example, from the burgeoning mail-order sector. We supply high-purity silanes and gases to the electronics industry, where expansion of the 5G mobile network and increasing deployment of artificial intelligence are stoking demand. Following a drop in demand at the end of last year, we expect the textile industry to turn the corner in 2023.

What is more, the long-term growth trends for our business have not changed and will accelerate in some cases. We see medium-term growth opportunities in all regions due to innovations arising from today’s megatrends, like the ongoing digital transformation. Rising affluence in emerging economies is likely to bolster our sales in countries such as China and India, and across Southeast Asia. WACKER’s portfolio has many high-value products that appeal to new customer groups, spurring stronger demand from our industrial customers. Moreover, part of our product portfolio is used in highly automated, industrial manufacturing processes. In these areas, WACKER is generating above-average growth, including in advanced economies.

Positive Medium-Term Trend in the Construction Industry

According to market research institute B+L Marktdaten GmbH, global construction volume will expand over the medium term. On average, it is expected to rise by 2.1 percent annually through 2025. In many markets, energy-efficient building renovation will gain further momentum. Capital expenditure on construction projects is likely to be strongest in Asia.

Construction-Industry Growth Rates by Region, 2023-2025

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WACKER POLYMERS, too, expects to see slight volume growth in 2023, driven by renovation, energy efficiency and sustainability. The main focus of growth will probably be in Asia, while uncertainty could prevail in Europe in the short term. In the medium-to-long term, numerous government programs around the world, such as the European Green Deal and China’s plan to achieve climate neutrality by 2060, should create additional momentum for the construction industry.

WACKER SILICONES projects that the proportion of value-added specialty products will continue to increase in many segments. Even though demand is likely to weaken in the construction industry, especially in the first part of the year, there are still opportunities for growth in 2023 – for instance with hybrid polymers, which are used to formulate high-performance adhesives and sealants, and with silane-based cement additives. In the thermal insulation segment, we anticipate rising demand for applications for efficient heat and cold insulation. Further opportunities will arise for our eco products, which are manufactured using resource-efficient raw materials.

Positive Trend in Electrical Engineering and Electronics Sector

The German Electro and Digital Industry Association (ZVEI) forecasts further growth in 2023. This positive development will be driven by the ongoing electrification and digitalization trends. The ZVEI expects global market volume to expand by about 5 percent, with growth of 7 percent in emerging economies and 3 percent in advanced economies.

WACKER continues to see good growth prospects in the automotive industry, fueled for example by the increasing use of driver-assistance systems, sensors and optical displays. The electromobility trend also remains unbroken, with more and more flame-retardant silicon-based temperature management products being installed.

Further Increase in Installed Photovoltaic Capacity

Economic conditions for photovoltaics (PV) will remain dynamic and challenging in 2023. On the one hand, intense competition is creating market uncertainty. On the other, levelized costs for solar power continue to drop, making PV more competitive relative to other energy sources. Solar energy is also an important component in achieving global climate-protection targets, since it significantly reduces specific carbon dioxide emissions compared with fossil fuels. Both the cost effectiveness of PV and the political goal of keeping global warming below 2 °C are opening up new markets. The PV market is expected to continue growing in 2023, with China remaining the world’s largest and most important market. Other markets adding large amounts of capacity are the USA, Europe, Japan and India. Highly promising growth regions include Central and South America, Southeast Asia, the Middle East and Africa. Programs in the USA and Europe to strengthen the photovoltaic industry in the respective local regions are likely to have an additional positive impact on demand. Based on its own market surveys and those of third parties, WACKER expects newly installed PV capacity to be between 300 and 350 gigawatts (GW) in 2023.