China still an opportunity for Europe’s chems – Cefic DG

LONDON (ICIS)–The turmoil in China’s stock markets at the start of 2016 is a temporary setback and the country still offers “huge and attractive” opportunities for European chemicals companies, the director general (DG) at the European Chemical Industry Council (Cefic) said on Monday.

Hubert Mandery, who is due to retire this year, said the EU also needs to secure a competitive playing field for European chemical companies, which face disadvantages in energy cost.

Moreover, Cefic’s DG said that the return of Iran to the world’s economy should be welcomed and that the potential crude oil to come to the already oversupplied markets would “hopefully” contribute to long-term low prices.

Mandery gave a positive spin to the current state of European chemicals, despite the latest figures from the region’s statistical agency showing a contraction in prices in November 2015.

Cefic’s own statistics also showed negative pricing and flat output for the first 10 months of that year. For 2016, however, Cefic forecasts chemical output in Europe at 1% growth, compared with overall production growth of 0.5% in 2015.

“As the backbone of many of Europe’s manufacturing sectors, the EU chemical industry still remains a world leader,” Mandery said. “Based on chemicals turnover, the EU chemical industry ranks second after China, but ahead of the United States (2014 figures).”

On China, Cefic’s DG said that despite weaker demand on the back of the economy’s slowdown and increasing competition in the country’s chemical market, it remains a “huge and attractive market both for chemical suppliers and their customer industries” because of the know-how of European producers.

“In the mid-term, European chemical producers – due to their high technological capabilities and innovative products – are expected to benefit from robust trend growth in China” from increased exports or via local investments,” said Mandery.

“To what extent depends on the competitive situation in each market segment and the development of final customer markets that rely on the chemicals industry – for example, consumer chemicals, automotive, electronics, food and nutrition, etc.”

Although Mandery said Europe’s chemical producers continue to be the most innovative and strive to find technological solutions to contribute to a greener economy, those efforts “are only part of the equation,” he said, noting the critical nature of the cost of energy and the EU regulatory environment.

Moreover, he said the agreement reached within the UN’s Conference of the Parties on climate change in Paris in December was welcomed as it managed to bring nations together in their common effort to fight climate change.

“This is in line with our ongoing efforts as an industry, for example, to improve our efficiency and resource utility. Europe’s commitment in Paris has been by far the most ambitious one,” he said.

“Therefore, it’s really important that European policymakers ensure further policy reforms – such as those proposed in the Emissions Trading System (ETS) – do not put European industry at a competitive disadvantage.”

Interview article by Jonathan Lopez

Pictured, Hubert Mandery. Source – Cefic