EPCA ’16: Europe chems producers upbeat on future business, profits in September – CMCI

01 October 2016 14:00 Source:ICIS News

BUDAPEST (ICIS)--European chemicals producers are upbeat on business conditions and profitability over the next year, although the uplift is not expected to extend to order volumes, according to analysis of the ICIS Chemical Market Confidence Index (CMCI) ahead of this year's European Petrochemicals Association (EPCA) meeting.

Producers are enjoying improved profitability compared to the same time a year ago, and expect this trend to continue over the next 12 months.

Expectations are more negative for current and future increases to order book volumes, indicating that improving business conditions are expected to be driven more by improving margins than stronger sales.

Producer CMCI September 2016
Market uncertainty has gradually dissipated following the UK referendum on EU membership, as it became apparent that no significant disruption to the union is expected for the next couple of years as policymakers in London and Brussels begin to deliberate over the form the UK’s exit will take.

Market jitters and private sector output contractions in the UK in the immediate aftermath of the vote, with the country’s manufacturing sector reporting order book some of the strongest rallies in order book volumes in years, according to analyst Markit.

Eurozone manufacturing sector output also improved in August, albeit more slowly, as strong improvements for German and Spanish private sector demand were balanced against modest contractions for Italy and France.

Producer sentiment mirrored CMCI outlook for the European industry as a whole on current and future business conditions, but producers were substantially more optimistic than the general industry.

Current assessments of business environment and profitability were substantially higher in September than had been reported by producers in the last two months (see graph).

Producer CMCI graph September 2016

The overall September CMCI hinted at stabilising conditions for the European chemicals sector as a whole after several volatile months, but improvements for business condition expectations and current profitability remained modest.

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

By Tom Brown