14 December 2012 10:02 [Source: ICB]
European chemical industry growth stalled earlier this year and has since contracted. The prospects for 2013 are not looking good.
"The EU chemicals sector faces increasing uncertainty as the domestic market continues to struggle and overseas competition remains relentless," Cefic president Kurt Bock said in early December. "The EU economic downturn is weighing down on the chemical industry in Europe at a time when other world regions also face challenges," he added.
European industry is struggling
"EU automotive and construction segments have been a drag on chemicals demand in 2012, offering few encouraging signs," the trade group said in its latest chemicals sector forecast. "Sluggish demand remains for new cars as government-backed incentives to replace vehicles have now run their course. The fall-out from overcapacity in the construction market has yet to wind down as the European building sector remains at historically low levels."
Cefic has revised down its September forecasts and says now that EU chemicals output, excluding pharmaceuticals, will contract by 2.0% in 2012. It forecasts only a slight increase in output in 2013, of 0.5%, but even that is based on the optimistic assumption that output will rise every quarter next year, having fallen in the fourth quarter of 2012.
Not surprisingly, petrochemicals are under great pressure with demand weak and businesses burdened by high naphtha costs. Customers and producers have tried to optimise inventory levels to manage poor demand and high costs.
Cefic said that only consumer chemicals will avoid a fall in 2012, while suggesting that the output from this sub-sector will climb by 1.0% in 2013. Consumers regularly spend on the household and personal care products that use such chemicals while they cut back on other expenditures.
The difficult operating environment hardly augurs well for the future and analysts for HSBC suggest that it will start to hit EU chemical company shares in 2013. "There is little value left in the sector over the next 12 months," the bank warned investors. By its calculations, industrial production globally will have to rise by a massive 12% in 2013 to continue to maintain EU chemical sector share price differentials.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
Sample issue >>
My Account/Renew >>
Register for online access >>
|ICIS Top 100 Chemical Companies|
|Download the listing here >>|
Asian Chemical Connections