UIC Sees Boost in Chemicals Demand In Wake of Iraqi War

24 March 2003 00:00  [Source: ICB Americas]

France's chemical industry association (UIC) projects that the growth of chemicals output in the country will almost triple this year, following a pickup in demand in the summer after the Iraqi war.

Production by France, Europe's second largest chemicals maker after Germany, is expected to go up by 2.9 percent, compared to a 1.1 percent gain in 2002. Without pharmaceuticals, the rise would be 1.7 percent against a drop of 0.9 percent last year.

"We drew up these forecasts a few months ago on the basis of the scenarios of the major companies in each sector," explains Marc Polaud, UIC's director of economic and international affairs.

"Maybe the figures now look optimistic because of the war," he adds. "But we do not see a need to change them. It is still possible that there will be a takeoff of the general economy in the middle of the year."

He adds that output trends for the first two months of the year were not "too bad" after a "disappointing" November and December.

The UIC expects chemicals output to grow faster in France than in Germany, Italy and the UK, but be slighly below a Western European average of 3 percent.

Prices of French chemicals are forecast to go up by an average of 1 percent this year after an average drop of 0.7 percent in 2002.

"There will be upward pressure on prices of organic chemicals because of the high oil prices," says Mr. Polaud. "With specialty chemicals and perfumes, there will be a continuation of the trend for regular annual price increases of 1 to 2.5 percent."

The UIC estimates there will also be stronger growth in chemicals trade this year, with exports going up by just under 7 percent against 2.5 percent in 2002. Imports will increase by 5 percent compared to static growth last year.

"It is very probable that the Iraqi war will not have a direct impact on trade, although other economic factors may influence export levels," says Mr. Polaud.

A recovery in confidence in the second half of the year will also boost investment by the French chemical industry, which is expected to increase by 7 percent this year against a de-crease of 12 percent in 2002.

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