Germany's competitiveness will be challenged by worsening economic conditions in external markets,particularly in light of the impact of Brexit. Even before the British vote to leave the EU knocked marketconfidence, polymer and petrochemicals production had come under considerable pressure. At the sametime, rising crude oil prices have been raising the cost of naphtha feedstock and producers will need to focuson reducing operational costs. Germany will need to capitalise on its core strengths in value-addedproduction and diversifying portfolios, which will rely on continued investment in research anddevelopment.
The German petrochemicals industry witnessed a recovery in profit margins amid growing output and salesas demand picked up in both external and domestic markets. However, risks continue to be posed by theimpact of Brexit on the EU economy as well as the collapse in the EU-US trade deal, which Germanmanufacturers had hoped would diversify markets.