European trader confidence improving, ICIS June CMCI shows

LONDON (ICIS)–Chemical traders and distributors have become more confident across all current indicators except future business conditions and current profitability compared with 12 months ago, analysis of the June ICIS Europe Chemical Markets Confidence Index (CMCI) showed on Wednesday.

Trader/Distributor June CMCI Change vs May

The rising confidence is likely the result of greater stability in upstream crude oil and stock prices through most of June.

Nevertheless, despite improved confidence traders and distributors still remain strongly negative on current business conditions, order book volumes and profitability compared with 12 months ago, continuing to show the impact that upstream volatility has had on this section of the market, which typically acts as both buyer and seller, and making its margins based on being able to accurately navigate market movements – an ability which diminishes as the market becomes more opaque. 

The UKs vote to leave the EU has once again destabilised financial, currency and crude oil markets.

It is unclear what role the so-called Brexit vote played in the fall in confidence in future business conditions, as the index was collated in the week preceding and in the immediate aftermath of the vote.

Although it is likely that it played a role for some players in their views in confidence at the end of the week, it is too early to see the full manifestation of the impact.

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