Struggling for Market Share and Global Competitiveness

Cefic Market Report on Europe´s Chemical Industry

21.12.2015 Despite a drop in EU chemical sales, confidence of European´s chemical industry is rising. This assessment was made in Cefic´s latest market report, issued in November 2015. European chemical output grew just 0.3 per cent during the first eight months of 2015 compared to the same period of 2014, according to the latest Cefic Chemicals Trends Report, while producer prices fell 4.5 per cent, year-on-year. Sales were down 3.0 per cent during January-July 2015, compared to the same period of 2014. Latest monthly data indicate  output growth of 0.8 per cent in August 2015 compared with August 2014, while EU chemicals prices dropped  4.0 per cent. The EU net trade surplus was €27.2 billion during the first seven months of 2015, widening  by €1.6 billion compared to the same period one year ago.

Bild für Post 55867

Picture: Cefic

Petrochemicals output continued to slide in August 2015, down a significant 4.9 per cent compared with August 2014. Polymers fell by 0.5 per cent during the same period. The drop was partially offset by 5.1 per cent growth in output of consumer chemicals. Basic inorganics and specialty chemicals generated considerable  output growth of about 2.4 per cent. By and large , EU chemicals output grew – just  0.8 per cent in August 2015 year-on-year – and for the first eight months was up just 0.3 per cent compared to same period of 2014. Petrochemicals prices declined by 10.4 per cent in August 2015 compared to the same month of 2014. Polymers prices recorded a modest decrease of 0.4 per cent in August 2015 compared to same month one year ago. Specialty chemicals experienced the same range of price decline as polymers during the same period. Consumer chemicals prices went up by 0.9 per cent during the same month. Overall,  producer prices in the EU chemicals sector declined 4.0 per cent in August 2015 (year-on-year). Lastly,  chemicals prices were down 4.5 per cent during the first eight months of 2015 compared to the same period one year ago.

Chemical Prices Slide, Sales Down

Total EU chemical sales dropped 3.0 per cent during the first seven months of 2015 compared to the same period one year ago. Sales in July 2015 declined by 1 per cent compared to June 2014, reaching the same level of sales as in July 2014. The EU net trade surplus was €27.2 billion during the first seven months of 2015, expanding  by €1.6 billion compared to the same period one year ago. The net positive trade balance through July 2015 with non-EU countries – a group including Russia, Turkey and Switzerland – was €5.2 billion, €1.7 billion lower than in the first seven months of 2014. Accounting for  this figure was a sharp fall in net exports to Russia, a key  EU chemicals trading partner. Net exports declined  significantly year on year, as exports to Russia fell 14.6 per cent, or €815 million, and imports rose  1.0 per cent, or €46 million.

Chemicals business climate improve
The EU chemicals trade surplus with Asia – excluding Japan and China – increased by €481 million to €4.64 billion. The EU‘s net chemicals trade surplus with China contracted by €618 million.

The EU chemical industry confidence indicator (CCI) rose slightly in the third quarter of 2015 compared to the previous quarter of the same year. Both the business situation at present and business expectations improved, while the chemicals order books component remained unchanged.  Employment expectations improved markedly. Capacity utilisation has stabilised  and is close to its long-term average. It remains 4.1% points below the post-crisis peak (Q1-2011).

Climate Debate
EU Chemical Industry Urges Level Playing Field

Concluding its annual General Assembly of the European chemical industry in Brussels, Cefic voiced its full support for tackling climate change and for the Commission‘s ambition to transform the EU into a competitive low-carbon economy. It urged EU policymakers to come to an ambitious deal at the December UN climate conference while ensuring a global level playing field between all major economies. At EU level, the reform of the Emissions Trading System (ETS) should allow the European chemical industry to stay competitive as an energy-intensive business, to avoid investments flowing to countries where carbon emissions are less regulated.

Cefic‘s position takes account of the EU‘s slow economic recovery since the 2009 recession and the region‘s higher energy costs compared to the U.S., Asia and the Middle East. As such, the chemical industry‘s growth prospects within the EU remain modest this year and next. Cefic for 2015 has cut its forecast for chemical production growth to +1.0% from +1.5%. For 2016 it expects modest growth of +1.5%.

Moreover, through to 2030, the European chemical industry‘s global market share is likely to continue its decline, which started in the early 2000‘s. This contrasts sharply with expectations that demand for chemical products will double, with the United States and Asia as the main beneficiaries of this growth in a fiercely competitive environment. Even with today‘s lower oil prices, cheaper shale gas feedstock in the U.S. remains a game-changer, boosting chemical output and foreign investments. China and other Asian economies are championing the chemical industry, recognising its strategic importance to their country‘s development, innovations and consumption needs.

„The next months will be a crucial test for EU policymakers to tackle climate change while also preserving the long-term competitiveness of the chemical industry. We have safeguarded our competitiveness partly by reducing energy intensity year after year, halving it since 1990, and we will pursue our efforts,“ said Jean-Pierre Clamadieu, President of Cefic and CEO of Solvay. „As a provider of solutions and innovations for almost all manufacturing sectors, the chemical industry enables the EU to achieve its goals for climate change mitigation and energy transition. But we also need the EU to help us regain competitiveness by adopting clear, realistic, long-term policies that bring investments and growth back into the region.“

Heftausgabe: Compendium of Industrial Parks Chemie/Pharma/Biotec 2015

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