Dec. 7 (Bloomberg) -- Germany's chemical production probably increased 6 percent this year, double an earlier estimate, as demand helped companies overcome a rise in raw material costs, said the industry's VCI trade group.

Growth will probably slow to 2.5 percent in 2006, said Werner Wenning, who heads the trade group.

German chemical companies including Bayer AG and BASF AG, the world's biggest chemical maker, are benefiting from global demand despite lackluster growth in their home market. Both companies raised their 2005 earnings forecasts after they were able to raise prices to counter higher raw material costs.

"The results are clearly more than was foreseeable at the middle of this year," Wenning said at the VCI's year-end press conference in Frankfurt. Still, "it will not be possible to repeat the high growth rates of the present year."

Wenning, who is also Bayer's chief executive officer, said sales this year probably increased 7 percent, beating VCI's previous estimate of a 4.5 percent rise.

German chemical companies probably raised their prices an average 3 percent in 2005, which helped sales rise to 152 billion euros ($179 billion), VCI said. Exports rose 8 percent to 81.5 billion euros, while domestic sales gained 6 percent to 70.5 billion euros. Consumer demand in Germany remained weak, VCI said.

Looking ahead, VCI expects price pressure from higher oil and natural gas prices to ease. That will mean producers may only be able to raise their prices 1 percent next year, it said. Sales should increase by 3.5 percent, VCI said.

To contact the reporter on this story:
Angela Cullen in Frankfurt at Acullen8@bloomberg.net