08 June 2010 20:06 [Source: ICIS news]
By Nigel Davis
LONDON (ICIS news)--Following the second half 2009 recovery and a particularly strong start to the year it is hardly surprising that concern has grown about just where demand goes next.
Macroeconomic uncertainties cloud the outlook. Sovereign debt issues have spooked financial and commodity markets worldwide.
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Cefic and the sector’s economists expect growth in chemicals production of 9.5% in the 27 member states of the EU in 2010 but output growth of only 2% in 2011.
The nearer-term figure is greater than that forecast in November. Output of the basic, commodity chemicals has rebounded and grown faster and longer than expected.
But, as Cefic notes, the output of all segments “remains well below previous levels”.
All-in-all, EU chemicals production, excluding pharmaceuticals, is still only at about the level seen at the end of 2005, before the extended upturn took hold. The chart here shows Cefic’s current projections for chemicals segment growth this year and next.
Growing back towards prior stronger levels of output will take time. Oxford Economics, in a regular global chemicals update at the start of this month, said it expected 2010 output growth of 10.75% in chemicals and man-made fibres in the 15 EU member states it monitors.
Following this peak it says non-pharma chemicals growth could average under 2% in these 15 countries until 2020.
Pharmaceuticals output has been weak so far this year and helped drag down the consultancy’s overall chemicals output forecast to 7.5% for 2010. EU 15 chemicals output could average 3.25% over the next three years and slip below 2.5% as 2020 approaches, it says.
EU non-pharma chemicals output so far this year has been driven by continued expansion in basic chemicals and by paints, Oxford Economics says.
West European chemicals output was up 2.5% quarter-to quarter in the first quarter of 2010 lifted by growth in Germany and despite weakness in pharmaceuticals.
Globally chemicals output growth has been strong, building away from the slump with growth overall of 12% between the first quarter of 2009 and the first quarter of 2010,
They suggest too that prices in the developed economies will grow below the rate of inflation over their forecast period out to 2020.
Clearly hopes are pinned on China to drive chemicals growth over that period although Oxford Economics suggests that expansion of the country’s chemicals output is likely to moderate over the medium term.
“Despite a likely moderation of Chinese growth over the medium term, the emerging economies will still account for 55% of world output by 2020,” its analysts say.
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