Europe CMCI shows downstream players see more volume but less profit

Mark Victory

26-Jul-2016

LONDON (ICIS)–European downstream chemical market confidence in order book volume growth rose in July compared with June, despite declining confidence in profitability, analysis of the European Chemical Market Confidence Index (CMCI) showed on Tuesday.

Downstream markets saw an increase in both the CMCI indicator for current order book volumes compared with 12 months ago, and with the CMCI indicator for order book volumes in the next 12 months.

Expectations on future profitability, however, have turned marginally negative – the first negative reading in from downstream markets on this indicator since the CMCI’s inception in May 2016.

Current business confidence among downstream markets also turned negative for the first time in July.

This is likely connected to concerns that GDP growth will weaken following the UKs vote to leave the EU. Large chemical end-use markets such as automotive and construction are heavily correlated with GDP movements, and downstream markets may fear price pressure from their customers if lower growth comes to pass.

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 indices 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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