Europe CMCI shows polyolefins players bearish on profitability

LONDON (ICIS)–Europe polyolefins players overwhelmingly believe that margins will weaken over the next 12 months, even as they expect order book volumes and business conditions to improve, analysis of the Europe ICIS Chemical Market Confidence Index (CMCI) showed on Friday.

This is in contrast to the overall Europe CMCI, which is positive on future profitability. Wider downstream markets are deeply uncertain – albeit marginally positive – over the growth of profitability in the next 12 months.

The negativity over profitability may be connected to US ethane and associated polyolefins capacity coming onstream this year leading to fears of increased overseas competition.

Polyolefins players also believe that margins and order books have weakened over the past 12 months.

Nevertheless, they are confident that order book volumes will increase in the next 12 months, and that business conditions have improved compared with 12 months ago, and expect them to continue to improve in the next 12 months.

The newly established ICIS Europe CMCI aggregates sentiment from hundreds of petrochemical market players actively involved in price negotiations across more than 60 different markets.

The Europe CMCI runs from +100, to -100, with zero on each index representing neutral, or uncertain conditions, a negative score indicating bearish expectations and a positive score representing bullish expectations. The indexes also gather sentiment on the comparison between the current situation and the situation across the past 12 months to give a complete picture of current market conditions and confidence. The information is gathered in the third week of each month.  A full methodology is available on request.

For more details on the overall Europe CMCI data, click here

Additional reporting by Linda Naylor