THE GERMAN CHEMICAL INDUSTRY JANUARY 05, 2017

Dr. Thorsten Bug, Senior Manager Chemicals

Agenda

1. The Chemical Industry Globally 2. The German Chemical Industry 3. Opportunities for Chemicals Producers in Germany

Main sources: • Cefic: The European Chemical Industry Councel, Brussels, www.cefic.org • Destatis: Statistisches Bundesamt (engl.: Federal Statistical Office), Wiesbaden, www.destatis.de • VCI: Verband der chemischen Industrie (engl.: German Chemical Industry Association), Frankfurt/Main, www.vci.de © Germany Trade & Invest

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Global chemical revenue With strong growth rates in the 10-years-period 2005-2015, the Asian Chemical Industry has more than doubled their share in global revenues.

32% 17%

26%

57% 8%

17% Europe

4% Japan

27%

NAFTA

2%

1%

Asia

Africa, Australia, Middle east

5%

4%

Latin America

Global revenue in percentage share 2005: EUR 1,622 billion Quelle: Cefic, Facts and Figures 2016 © Germany Trade & Invest

2015: EUR 3,534 billion www.gtai.de

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Global Chemical Revenue Despite China’s strong growth, Europe continues to be a relevant and growing market.

2005: EUR 1,622 bn

Europa

Asien

NAFTA

EUR 519 bn (32%)

Japan

CAGR = 1,7%

EUR 615 bn (17%)

2015: EUR 3,534 bn

Andere

Quelle: Cefic, Facts and Figures 2016 © Germany Trade & Invest

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Global Chemical Revenue Germany is the world‘s third largest chemical market, being surpassed only by China and USA in terms of revenues. Chemical Revenue in EUR billion, 2015 1500

1000

500

0 China

USA

Germany

Japan

South Korea

India

France

Taiwan

Brazil

Italy

Source: Cefic, Facts and Figures 2016. Total revenue globally 2015: EUR 3,534 billion. © Germany Trade & Invest

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European Revenues With a share of 28% in 2015, the German chemical industry has consolidated it‘s leading role in Europe during the recent years. European (EU-28) Chemical Industry Revenues in EUR billion, 2011–2015 600

500

EUR billion

400

92 36 38

200

90

89

81

Rest of EU-28 Belgium

37 39 38

38 38 38

36 38 40

37 39

55

50

49

UK

55

42

52

52

52

53

Netherlands

80

78

77

78

74

Italy

46 300

93

51

45

Spain

France

100

164

161

165

154

148

2011

2012

2013

2014

2015

Germany

0

Quelle: VCI, Chemiewirtschaft in Zahlen 2016 © Germany Trade & Invest

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Agenda

1. The Chemical Industry Globally 2. The German Chemical Industry 3. Opportunities for Chemicals Producers in Germany

Main sources: • Cefic: The European Chemical Industry Councel, Brussels, www.cefic.org • Destatis: Statistisches Bundesamt (engl.: Federal Statistical Office), Wiesbaden, www.destatis.de • VCI: Verband der chemischen Industrie (engl.: German Chemical Industry Association), Frankfurt/Main, www.vci.de © Germany Trade & Invest

www.gtai.de

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The History of the German Chemical Industry Within 50 years, revenues increased by a nominal 5.4 % (real 3.1%) on average a year. This resulted in a 14-fold productivity increase. Revenues and Number of Employees of the German Chemical and Pharmaceutical Industry 700

180 598

568

160

568

140 500

470

458

415 400

120 100

171 300 135 200

80 60

100

Revenues in Euro billion

Number of employees in Thousand

600

40 65

100 12

0

1960

20

30

0 1970

1980

1990

2000

2010

Quelle: VCI, 2013. Details: 1960 without Saarland. From 1964 on including West-Berlin; 1970, 1995, and 2008 new Classification. From 1991 Germany reunified. © Germany Trade & Invest

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German Chemical Companies Structure The industry is “dominated” by small companies, whereas the lion’s share of revenues are raised by large corporations. Number of Chemical and Pharmaceutical Companies, Employees and Revenues by Company Size, 2015 80 72

71

70

63

60

in %

50 40 31

30

25

24

20 10

4

7

4

0 Number of companies 1 - 49 employees

Employees 50 - 499 employees

Revenues > 500 employees

Source: VCI, Chemiewirtschaft in Zahlen 2016, Table 18. © Germany Trade & Invest

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Chemical Exports Germany is the second largest exporter of chemicals globally.

Chemical Exports by Country in EUR billion, 2015 140 120 100 80 60 40 20 0 USA

Germany

China

Belgium

South Korea

The Netherlands

Japan

France

Saudi Arabia Singapore

Source: VCI, Chemiewirtschaft in Zahlen 2016, Table 61b. © Germany Trade & Invest

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German Chemical Exports European countries are dominating German Chemical Exports. EU 28 European non-EU (without Germany)

60%

10%

16%

7% Asia NAFTA

3% Latin America

3% Rest of the world (ROW)

Source: VCI, Chemiewirtschaft in Zahlen 2016, Table 42b. © Germany Trade & Invest

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Chemical Market Segmentation Fine and specialty as well as basic chemicals continue to constitute the backbone of the German chemical production market. Chemical Market Segmentation by Revenues in EUR billion, 2010–2015 50

EUR billion

40

30

20

10

0 Petrochemicals

Fine & Speciality Chemicals 2010

Polymers 2011

2012

2013

Anorganic Basic Chemicals 2014

Detergents & Care Products

2015

Source: VCI, Chemiewirtschaft in Zahlen 2016. © Germany Trade & Invest

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German Chemicals Production Despite the economic downturn in 2009, the Basic Chemicals output in Germany remained almost steady since 2000. Production Volumes of Basic Chemicals in Germany, 2000–2015

Thousand tons

8.000

6.000

4.000

2.000

0

2000

2005

2010

2015

Source: VCI, Chemiewirtschaft in Zahlen 2016, Table 4a and 4b; Oxygen in million m3 under normal conditions.. © Germany Trade & Invest

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Germany‘s private R&D spending German chemical industry R&D expenditure was EUR 4.4 billion in 2015, making the sector the fifth strongest in Germany. R&D Expenditure by Industry, 2006–2015 70

60

4,4 4,3 4,0

50 40 30

3,7 3,6

3,7

3,5

5,4

4,5

4,7

4,8

10,6

9,2

4,7 5,1

3,6

5,1 4,9

9,9

8,3

3,5 4,8

5,8

5,3 5,5

5,1 9,4

5,8 10,1

3,9 6,0 5,9

6,3

6,1 6,6

Pharma

6,3 11,0

10,5

Chemicals

10,9

Mechanical engineering Electrical engineering

8,5

20 10

21,0

21,8

23,3

25,7

19,8

23,3

27,2

2006

2007

2008

2009

2010

2011

2012

28,1

29,5

2013

2014

33,3

Automotive

0 2015

Source: VCI: Chemiewirtschaft in Zahlen 2016, Table 48. © Germany Trade & Invest

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Chemical Patents Germany is number two spot for European chemical patent registrations only surpassed by the US. European Chemical Patents granted by the EPO by Source Country in %, 2007–2015 100 90 80 70

13

14

14

4 3 4 5 7

4 4 4 5 7

0

4 4 4 5 7

0

60 17

16 1

4 4 3 5 6

16

ROW

2

China

3 3 4 5 7

Italy Netherlands UK

15

50

17

17

15

Switzerland France

40 23

21

20

19

18

30

Japan Germany

20 10

24

26

25

25

27

2007

2009

2011

2013

2015

USA

0 Source: European Patent Office (EPO) © Germany Trade & Invest

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Electricity generation In the last 25 years Germany got “greener” as Renewables has grown from 2% up to 19%. Nuclear energy decreased by 1/3 in the same period. Electricity Generation in Germany by Energy Carrier in %, 1990–2015 100%

75%

2 8

24

3 8

23

3 9

6

12

11

19

Renewables

12

24

10

21

Natural Gas 18 20

50%

31

Hard Coal 32

35

32

28

20

25% 33

30

27

26

25

29

Nuclear Energy

Lignite

Other sources 0%

1990

1995

2000

2005

2010

2015

Source: AG Energiebilanzen e.V. (http://www.ag-energiebilanzen.de/) © Germany Trade & Invest

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Investments in Europe Thanks to market attractiveness, most chemical investments in Europe for the period 2011 to 2015 occurred in Germany. Number of Investments in Europe, 2011–2015 300 250 200 150 100 50

Chemicals

Plastics

Rubber

Quelle: fDi markets. Anzahl Investitionsvorhaben (1338): Chemie (651), Kunststoffe (536), Gummi (151). Graphisch dargestellt sind 89% aller Investments. © Germany Trade & Invest

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The Chemical Cluster Landscape

Chemical Cluster offer added value to their members: • as networking platform for R&D institutes, companies, and authorities within the region • through strategic alliances with international chemical sites in Europe, Asia and the US • strengthen the cluster members’ global competitiveness

© Germany Trade & Invest

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Agenda

1. The Chemical Industry Globally 2. The German Chemical Industry 3. Opportunities for Chemicals Producers in Germany

Main sources: • Cefic: The European Chemical Industry Councel, Brussels, www.cefic.org • Destatis: Statistisches Bundesamt (engl.: Federal Statistical Office), Wiesbaden, www.destatis.de • VCI: Verband der chemischen Industrie (engl.: German Chemical Industry Association), Frankfurt/Main, www.vci.de © Germany Trade & Invest

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Raw Materials Supply Germany´s chemical industry regions are well connected to the European pipeline grid. Infrastructure of raw materials supply: • Crude oil via pipelines from: – Russia – the Mediterranean Sea – France – the North Sea • Crude oil processing via: – 14 refineries – 8 steam crackers • Pipelines for: – ethylene and propylene – natural gas – hydrogen – carbon monoxide

© Germany Trade & Invest

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Phletora of Logistics Additionally to the pipeline grid, Europe’s longest autobahn, rail and waterway network connects Germany with its nine neighboring states. Autobahn

12,550 km

Railways

40,330 km

Waterways

Seaports

Major Airports*

© Germany Trade & Invest

7,450 km

9

12

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Chemical Parks „Plug & Play“ concept

Chemical Parks – Advantages: • About 30 chemical parks offer costefficient and unique benefits through: – excellent infrastructure – chemical raw materials via pipelines – gases and steam via pipelines – secure energy supply

• Site operators offer expertise and services from one source • Investors choose the services from site operator that suits their business model best

Source: Factsheet „Chemical Parks in Germany“, Germany Trade & Invest, April 2015. © Germany Trade & Invest

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Chemical Parks – Selected Locations

A B

A

B © Germany Trade & Invest

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Chemical Parks – Selected Locations

A B C D

C

D © Germany Trade & Invest

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Chemical Parks – Selected Locations

A B C E

D E

F

F © Germany Trade & Invest

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Germany Trade & Invest Contact

Germany Trade & Invest Foreign Trade and Inward Investment Promotion Agency Dr. Thorsten Bug Senior Manager Chemicals T. +49 (0)30 200 099-603 [email protected]

Berlin Headquarters Friedrichstraße 60 10117 Berlin Germany T. +49 (0)30 200 099-0 F. +49 (0)30 200 099-111 www.gtai.com

© 2016 Germany Trade & Invest All information provided by Germany Trade & Invest has been put together with the utmost care. However weGermany assume no&liability © Trade Invest for the accuracy of the information provided.

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