Germany's VCI sees chemicals sector 'bright spots' as lifts forecast

May 15 (Reuters) - Germany's chemicals industry association raised its annual output forecast on Wednesday, highlighting 'bright spots' after a better than forecast start to 2024 due to higher demand outside Europe, particularly in Asia, North America and Latin America.

The VCI lobby group, which represents around 1,900 companies in Germany's third-largest industrial sector, now expects production volumes including pharmaceuticals to rise by 3.5%. It had previously forecast production to stagnate at 2023 levels.

Chemicals firms have cut inventories over the past two years due to weak demand, but some are seeing tentative recovery signs as volumes slowly pick up in the U.S., Europe and China.

"We are now looking to the future with a little more confidence, as growth prospects are slowly brightening," said VCI President Markus Steilemann, who is also Chief Executive of chemicals group Covestro.

"One good quarter does not make up for the slumps of the crisis years. The situation is fragile overall." he added, calling for political action to tackle the structural problems affecting Germany's chemicals industry.

VCI's forecast echoes the Ifo economic institute's latest barometer for Germany's chemical industry, which slightly improved in April, with companies expecting higher orders from abroad and to expand production in the coming months. (Reporting by Tristan Veyet and Bartosz Dabrowski; Editing by Alexander Smith)