Germany cranks up chemical imports as energy crisis hikes costs

Germany is increasingly getting vital chemicals from abroad as the country’s industrial giants like BASF SE struggle with sky-rocketing energy prices from Russian gas cuts. 

Chemical import volumes have almost doubled this year as the crisis deepened. Germany imported around 2.8 billion tonnes of inorganic chemicals in the first half of 2022, according to Germany’s federal statistics office. That’s around 40% more in volume terms than during the same period a year ago.

Meanwhile, domestic chemical production has fallen precipitously as manufacturers curtail production due to sky-high gas costs.

The shift underscores the depth of the energy crisis in Germany, which is suffering from higher prices than neighboring countries due to its dependence on Russian gas. The drop in domestic production could be an early sign of the economic crisis that is building in the country.

BASF, Germany’s largest chemical producer, said in July it had begun buying ammonia, rather than producing it, to reduce gas consumption at its Ludwigshafen factory. Meanwhile, Abu Dhabi National Oil Company sent its first shipment of low-carbon ammonia to Germany this month. 

“We are going to see meaningful import substitution of energy- and gas-intensive products,” said Oliver Rakau, an economist at Oxford Economics. “The evidence is likely to mount in the coming months.”