06 December 2012 10:56 [Source: ICIS news]
LONDON (ICIS)--The European Chemical Industry Council (Cefic) has slashed its output forecasts for industry in 2012 and 2013 in Europe on the back of a stagnant economy and weak performances from key end markets, it said on Thursday.
The industry body predicts that European chemicals output will contract by 2.0% in 2012 compared to 2011, and will expand by 0.5% in 2013.
The move represents the association’s latest downgrade of its output forecasts for the European chemicals industry. Cefic predicted in September that industry output would contract by 1.5% in 2012, down from earlier estimates that output would be static year on year, and that output would increase by 1% in 2013.
The EU automotive and construction industries – key markets for chemical producers – have been depressed during the year as a result of sluggish demand for new cars and overcapacity issues in the building industry, Cefic said. Several government-backed incentive schemes to encourage the purchase of new cars have also now run their course, the association added.
Cefic president and BASF CEO Kurt Bock said: “The EU chemicals sector faces increasing uncertainty as the domestic market continues to struggle and overseas competition remains relentless. EU policymakers need to continue to work towards putting Europe on a better economic footing to help us move out of this difficult period.”
EU chemicals production is likely to remain 8% below pre-recession levels in 2012, Cefic said, while volatile oil and naphtha prices have caused uncertainty in the petrochemicals industry as buyers and sellers seek to optimise inventory levels.
Slowing growth in China, Japan’s fall back into economic contraction, and uncertainty over the US “fiscal cliff”- a raft of budget cuts and tax increases set to come into effect in the new year – are key international factors exacerbating Europe’s economic malaise, according to the association.
The prevalence of shale gas in the US and the resultant fall in energy costs also presents a longer-term threat to the competitiveness of the European chemicals industry, it added.
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