France Chimie calls for sector support as crisis continues and structural changes limit investments

LONDON (ICIS)–Chemicals production growth in France could be limited to 1% in 2024 as many companies prepare to implement structural cost saving measures and limit investments for growth, the trade group France Chimie said on Tuesday.

The industry in France is weakened by an “unprecedented crisis” as is the sector across Europe, it suggested, with basic chemicals, including petrochemicals and polymers, under intense pressure.

The basic chemicals sector in France was dealt a blow last week with the ExxonMobil Chemical France decision to close its steam cracker and polymer units at its Gravenchon site in Port-Jerome-sur-Seine, in Normandy. The closures – following €500m of losses from the site since 2018 – will result in the loss of 677 jobs, ExxonMobil France said on 11 April.

Chemicals production in France fell by 1% last year compared with a drop of 8% in Europe, France Chimie said. The number excludes pharmaceuticals and fine chemicals. France is a leader in industrial exports, fourth in terms of patent filings in Europe and has a growing workforce, the trade group added.

The headline figure, however, does not reflect the deeper contraction in parts of the sector.

Perfumes and cosmetics chemicals have grown 15% since 2021 while specialty chemicals output has contracted 4% compared to a -13% in Germany, France Chimie noted. Basic chemicals in France, on the other hand, are contracting at a similar rate to their counterparts in the rest of Europe.

“These activities are suffering from a loss of competitiveness aggravated by the pressure from international competition that is not always subject to the same regulatory requirements, “ it said in a statement translated from French.

France Chimie expects growth investments in chemicals in France to fall by 40% this year in favor of what it calls regulatory and maintenance investments growth of around 20%.

The sector needs an ambitious EU industrial policy that is in line with the Green Deal objectives to restore industrial sovereignty and preserve high quality employment, it said.

In France, France Chimie is pressing for the next regulation of nuclear power to preserve the attractiveness of competitive electricity prices. It wants to see the France 2030 plan allowing competition on equal terms with the Inflation Reduction Act (IRA) support in the US. It calls for the use of trade defence mechanisms to restore fair international competition; simplified and stabilized regulations adapted to merging sectors of the economy; and support for research competitiveness, particularly through France’s Research Tax Credit.

“The chemical industry is waiting for strong measures from the European and French public authorities to restore its development momentum,” France Chimie president Frederic Gauchet said.

“The objective is not only to contribute to the development of European sectors (battery, hydrogen, health, bio-based products, recycling, etc), but also to support our existing sites so that chemistry continues to contribute fully to a sovereign and decarbonized economy and preserves quality employment in France.”

Focus article by Nigel Davis.

Thumbnail photo: A plant operated by France’s TotalEnergies in Antwerp, Belgium (Source: TotalEnergies)