CBI survey shows UK chem firms prepare for slight downturn

25 November 2004 16:41  [Source: ICIS news]

LONDON (CNI)--UK chemical companies' order books have faded in the last month, according to figures published by the Confederation of British Industry (CBI) on Thursday.

 

In a sample of 51 chemical companies, only 25% said their forward bookings were higher than normal for the time of year, compared with 35% in a similar survey conducted last month. About 20% said their order books were lower than expected - virtually the same as last month's finding - while 55% said their orders were at normal levels, compared with 46% last month. (All percentages are weighted according to the size of the respondent companies.)

 

Export orders are virtually unchanged from last month, with 25% of companies claiming to have higher than normal bookings, 15% less than normal, and 59% at normal levels.

 

The survey found that manufacturers are running down their inventories of finished product. Although last month just over half of respondents said they had too much finished product in stock, by November the number of over-stocked producers had fallen to 34%. Nearly 30% said their stocks of finished goods are now too low, compared with only 6% last month.

 

The numbers suggest chemical manufacturers are preparing for a slight slowdown. This was confirmed by their output predictions: only 16% said they expect output volumes in the next three months to increase, while 26% are now expecting a fall. In last month's survey, 45% of companies were expecting output to increase while only 7% forecast a downturn.

 

On the other hand, producers are much more optimistic about price trends. This month, 35% said they expected their domestic sales prices to rise over the next three months and only 8% expect prices to fall. Last month it was the other way round, with only 9% predicting price rises and 32% expecting falls. This finding may, however, be related to the price of oil.

 

There were marked differences between industry sectors. The large majority (85%) of agricultural chemicals makers report below-average bookings, export orders weak, stocks too high and prices heading down. Man-made fibres manufacturers are in a similar, though slightly less desperate, position, although their export orders look especially grim with all companies reporting below average levels.

 

However, pharmaceutical and consumer chemical companies reported generally improved order books, especially for exports, while prices looked stable and inventories at normal levels.

By: Peter Mitchell
+44 20 8652 3214

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