Sector-Specific Conditions

(ESRS 2.40 ii, ESRS 2.42 c)

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

Chemical sector dampened by low industrial production

The chemical-sector downturn continued in 2024, reflecting the worldwide weakness of industrial activity. Multiple industry sectors curbed their output because goods consumption was slow. According to estimates released by the German Chemical Industry Association (VCI), global chemical production (excluding pharmaceuticals) grew by 4.8 percent in 2024. Trends varied widely across major markets. In North America, chemical production stagnated at 0.0 percent, while it increased by 2.0 percent in the European Union and by 8.0 percent in China.

In 2024, Germany’s chemical-pharmaceutical sector was again impacted by weak economic conditions and structural problems. Total production grew by 2 percent, with chemical output (excluding pharmaceuticals) increasing by 4 percent in 2024. This slight increase, though, did not make up for the production downturn of previous years. Producer prices fell by 2.5 percent year over year. For 2024, the VCI reported contracting domestic and international sales amid weak order intake, with capacity utilization well below normal levels in both the chemical and pharmaceutical sectors. As a result, the first plants were permanently shut down. According to the VCI, total sales for Germany’s chemical-pharmaceutical industry declined by 2 percent to €221 billion. According to a survey conducted among VCI members in November 2024, companies cite high regulatory barriers as their biggest challenge. High labor costs, coupled with taxes and social security contributions, are considered to be problematic, too.

Global construction volume in downward trend

According to analyses by the market research institute B+L Marktdaten GmbH, the global construction industry trended downward in 2024. Preliminary figures show that construction volume (buildings and civil engineering works) worldwide fell by 2.6 percent year over year and totaled some US$8.88 trillion in 2024 (2023: US$9.12 trillion). As in the previous year, the decline in new construction was particularly strong. However, in the modernization and renovation market, the first signs of positive momentum returned.

Residential construction was significantly weaker than the other segments in 2024, declining by 5.0 percent. This trend varied widely from region to region in 2024. While the declines in residential construction were substantial in Asia (7.5 percent year over year) and western Europe (7.4 percent), the contraction in North America was much more moderate at 1.1 percent. The Middle East and Africa was the only region in 2024 where residential volumes developed positively (1.5 percent year over year).

International automotive markets report rise in new registrations

According to the Association of the German Automotive Industry (VDA), trends on global car markets diverged significantly in 2024. Europe, the USA and China – the three key regions accounting for over two thirds of new car registrations worldwide – reported growth, albeit at different rates. China – unlike Europe and the USA – posted sales above its pre-pandemic level of 2019. In India and Brazil, car markets generated higher growth, while Japan faced a substantial year-over-year decline. A comparison of Europe’s five largest individual markets showed that Spain, the UK and Italy made gains, while Germany and France delivered a weaker performance, with slight declines. In Germany, registrations for battery electric vehicles slowed, whereas the market for plug-in hybrids posted year-over-year growth. According to the VDA, just under 3.2 million cars were delivered from German factories to customers across the globe in 2024 as a whole, up by 2 percent on 2023. This means that exports were still 9 percent lower than the 2019 pre-crisis level, when 3.5 million new cars were exported from Germany.

Strong sales growth in the semiconductor industry

The global semiconductor market performed positively in 2024. According to a forecast released by the World Semiconductor Trade Statistics Organization (WSTS), the market grew by 19 percent year over year. Its estimated volume comes to around US$627 billion. Developments within the industry vary considerably from segment to segment. Growth was driven first and foremost by high demand for chips for AI applications, which data centers rely on. The dominant market positions enjoyed by a handful of companies in this growth segment shaped the price trend in 2024. The rest of the semiconductor industry, on the other hand, was confronted with weak demand and declining sales. This can be traced back to weak demand for end products in what have traditionally been high-volume consumer markets, such as smartphones, PCs or consumer electronics. This resulted in weak demand for silicon wafer deliveries, which serve as a key market indicator. As a result, semiconductor manufacturers were left with a surplus of silicon wafers. The Semiconductor Equipment and Materials International (SEMI) industry association estimates that silicon wafer deliveries fell by 2 percent in 2024.

Looking at the individual regions, the North and South American markets witnessed the highest growth year over year at 39 percent, followed by Asia-Pacific at 18 percent. The figure in Japan was up slightly against 2023 at 1 percent, whereas growth in the European market was down at 7 percent.

Photovoltaics (PV) pivotal to global energy supply

The global solar industry continued to expand in 2024. Various market studies and our own market surveys show that new capacity of some 560 gigawatts (GW) was installed globally (2023: about 450 GW). That was an increase of around 24 percent year over year. At year-end 2024, the amount of installed photovoltaic (PV) capacity worldwide reached around 2.2 terawatts (2,200 GW). As a result, the sustained and rapid growth of global photovoltaic markets continued in 2024. Alongside incentives, key factors spurring global PV expansion included low system costs. Today, photovoltaics is already competitive compared with electricity generated from conventional energy sources. In several solar auctions in sun-rich regions, the trading price for solar power was even less than US$15 per megawatt-hour. Despite the global rise in new installations, conditions in the PV industry remained challenging. In the USA and India, tariffs on imported solar cells and modules are pushing up prices and impeding growth. And, in China, the PV industry has built up vast excess capacity. Strong competitive pressures continue throughout the supply chain.

Raw-material prices remain largely unchanged year over year

(ESRS 2.42 a, c)

After prices dropped substantially for some of WACKER’s key raw materials in 2023, most of these materials trended sideways in 2024. All in all, however, raw-material prices were down year over year. Generally, many markets experienced weak demand coupled with a robust supply side.

In 2024, market prices for metallurgical-grade silicon, one of WACKER’s key raw materials, were on a par with a year earlier, after the demand slump of 2023 had pushed prices down sharply. On the one hand, WACKER’s main petrochemical raw materials – vinyl acetate, acetic acid and ethylene – mirrored the cost trends of the basic materials used in their production, such as crude oil/naphtha, natural gas and coal. On the other hand, excess supply eroded the prices of many materials. European prices for methanol rose, unlike other petrochemical raw materials, due to temporary supply shortages.

Market-price trends for WACKER’s key raw materials in Europe

Silicon metal

(€/t)

Ethylene

(€/t)

Methanol

(€/t)

Vinyl acetate monomer

(€/t)

Energy prices still at elevated level

(ESRS 2.42 a, c)

Prices for coal and natural gas remained at a high level in 2024 after declining the year before. Following an easing of the natural-gas supply due to globally mild winters in 2022/2023 and 2023/24, natural gas prices stabilized in Europe at around double their pre-crisis level. As a result, moreover, wholesale electricity prices, while volatile, settled at around their 2023 year-end level, which was about twice as high as in 2019 and 2020. Price-reducing effects included not only an increase in electricity from wind and photovoltaic systems and the greater availability of French nuclear power plants, but also a decrease in industrial energy consumption amid the economic slowdown. In non-liberalized markets, such as in Asia, part of the rise in coal and natural-gas costs did not impact until 2024, with price increases, including for electricity.

Coal prices remained stable, with the supply side strong and demand still low due to a sound supply of natural gas and the weak economic environment. Crude-oil prices largely moved sideways during the year. Two temporary price rises, triggered by phases of political nervousness, occurred in early and late summer. Both were clearly subdued by the persistent weakness of demand in the economy. At year-end, the average monthly price for Brent crude oil was almost US$73 per barrel. The price of CO₂ rose strongly in the first quarter, but then fell again during the year. This decline was prompted not only by a drop in demand amid lower-than-expected emissions from coal and oil-based products, but also by industrial demand remaining cyclically weak in the second half of the year. In the medium term, a foreseeable and marked shortage of CO₂ certificates merely dampened the cyclical fall in prices.

WACKER’s energy costs continued to drop significantly in 2024 despite broadly flat spot market prices. On the one hand, this was the result of rolling contractual coverage, which meant that part of the decrease in 2023 market prices did not affect WACKER until 2024. On the other hand, energy costs also fell because electricity consumption was lower due to the decline of polysilicon output.

Market-price trends for energy sources relevant to WACKER

Traded electricity price in Germany

(EEX German Day Ahead) (€/MWh)

CO₂

(€/t) (EEX Spot)

Brent crude

(€/bbl) (ICE front month)