Growth in EU chems industry will slow to 2.5% in 2011 - Cefic

07 December 2010 13:49  [Source: ICIS news]

CeficLONDON (ICIS)--Growth in the EU’s chemicals industry will slow to 2.5% in 2011 after a recovery of 10% this year as domestic demand remains below pre-crisis levels, chemical industry association Cefic said on Tuesday.

“We maintain our view from earlier this year that the sharp chemicals rebound in 2009 and early 2010 was driven by inventory rebuilding, support measures, and exports,” said Cefic’s director general Hubert Mandery.

“But chemicals output levels forecast for the end of 2011 will remain well below the peak levels reached in 2007,” he added.

Cefic said that overseas demand had been the main driver of growth in 2010, but added that domestic demand from within the EU still remained short of pre-crisis levels.

It said the latest data showed the pace of growth in Europe has been slowing in 2010 as government economic stimulus has faded and underlying demand has taken over.

Cefic said risk factors to growth included sharp fiscal tightening by member states, very strong price increases for several types of raw materials and fluctuations in the value of the euro.

The association said that economic policies in non-EU countries could provoke fears in other countries, and that demand for European goods could ease if emerging economies curb their rapid growth.

Strong economic activity in Asia is currently driving up commodity prices, notably of oil, and destabilising price spikes are possible, said Cefic.

It also said the European chemical industry had undertaken streamlining of operations, but that global competition remained fierce as Middle East capacity increases, the expansion of Asian producers continues and companies in the US benefit from less expensive shale gas.

In the first eight months of 2010, the European chemical industry posted a trade surplus of €32bn ($42.7bn) and a €42.6bn global trade surplus in 2009, said Cefic president Giorgio Squinzi.

“Competitive pressures, especially from overseas competitors, will make it more important than ever for policymakers to set the right framework conditions in Europe and to reduce unnecessary regulatory burdens, which would help European industry grow their businesses,” he added.

($1 = €0.75)

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By: Hilde Ovrebekk
+44 20 8652 3214

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