Europe June ethylene chain confidence worsens – CMCI

Jonathan Lopez

30-Jun-2016

LONDON (ICIS)–Business sentiment in the European ethylene chain worsened in June month on month in most categories although five out of six indicators remained in positive territory, analysis of the Europe ICIS Chemical Market Confidence Index (CMCI) showed on Thursday.

However, sentiment in four categories worsened compared to the broadly upbeat ethylene CMCI published in May.

CMCI June ethylene

European ethylene players’ sentiment about business conditions in June 2016, compared to the past 12 months, worsened more than 14.3 points in a scale in which minus 100 would the most negative sentiment and plus 100 the most positive, with 0 as the neutral point.

Overall, ethylene sentiment on business conditions compared to the past 12 months stood at 14.3 points, compared to 28.6 points in May.  

Expectations for business conditions in the next 12 months decreased in June to a lesser extent, falling 3.2 points compared to May, although the overall positive sentiment stood at 14.3 points, compared to May’s 17.5 points.

Order book volumes in the European ethylene chain in June compared to the past 12 months remained little changed, with a just a half points increase (rounded), improving from the 5.3 points posted in May to June’s 5.7 points.

However, ethylene players in Europe are pessimistic about the future, deepening the negative figures of May. Order book volumes in the next 12 months are expected to worsen considerably with a 20 points decrease in sentiment.

From May’s upbeat 28.6 points in positive territory, feeling for the next 12 months deceased sharply in June, with just 8.6 points in positive territory.

Profitability in the ethylene chain is expected to improve in the next 12 months, although that would not be hard to achieve as sentiment has been in negative territory both in May and June.

Compared to the past 12 months, profitability sentiment worsened in June by 4.3 points, keeping the index at a negative 11.4 points, lower than May’s 7.1 points.

However, ethylene players are somehow optimistic about profitability in the next 12 months, with a net improvement of 2.9 points compared to May, when the index stood at a neutral 0 points.

The ethylene Europe ICIS Chemical Market Confidence Index (CMCI) survey was conducted before the UK went to the polls to decide on its EU future on 23 June, or in the immediate aftermath of the referendum vote deciding to leave the EU. Therefore, it is unclear what role the so-called Brexit vote played in the index.

Additional reporting by Mark Victory

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

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