German Industrial Plant Building Orders dip to 2004 Levels
German manufacturers of large industrial plants reported a 12-year low in new orders for 2016 as the weak oil price held back demand in the Middle East while Germany's move to renewable energy wiped out demand for conventional electricity generation.
Orders booked by the Germany-based companies - which include Linde, Siemens (SIEMENS.NS) and Thyssenkrupp (TKA.F) - fell 3 percent to 18.9 billion euros ($20.6 billion), their lowest level since 2004, with foreign orders down 10 percent.
"A number of mega-projects in Egypt and Russia ensured that export business did not contract further," said Juergen Nowicki, spokesman of the large industrial plant manufacturers' group of Germany's VDMA mechanical engineering industry association.
Siemens in January completed the first phase of an 8 billion-euro electricity contract in Egypt, its largest single order to date, while Linde won a major order from Gazprom last year to build natural gas-processing plants.
Exports account for more than 80 percent of large industrial plant work carried out by German firms, who are increasingly dependent on emerging markets as many industrialised countries move away from fossil-based fuels and the large plants that are needed to generate electricity from them.
The association said the focus was shifting to medium-sized projects below 100 million euros, with fewer major orders of 125-500 million euros in value, as customers sought modular plants capable of flexibly manufacturing small batch sizes.
German domestic orders rose to 3.7 billion euros from 2.6 billion euros in 2015, the VDMA said on Monday, lifted by modernisations, service orders and spare parts.
It said most of its members were expecting sluggish sales at best for this year and falling German staff numbers, while they saw sales opportunities arising in the United States and Iran.
Reporting by Georgina Prodhan
