EU chems output to grow 3% in 2021 but ‘green shoots’ need supportive industrial policy – Cefic

Tom Brown

25-Feb-2021

LONDON (ICIS)–EU chemicals production is expected to increase 3% this year after a decline of nearly 2% in 2020, industry body Cefic said on Thursday.

Cefic’s director general described the improving indicators as “green shoots” but called on the EU to implement a comprehensive industrial policy to help chemicals continue growing.

Firmer demand in many chemicals markets in the closing months of 2020 is expected to continue this year, Cefic said, despite market expectations of slightly softer demand in the second quarter.

Some weakening of pricing power is expected, particularly for commodity chemicals, in the second half of the year, it added.

Sector output is expected to increase 2% in 2022.

The projected increase follows the overall decline last year on the back of the severity of lockdowns introduced in the region in the first stages of the pandemic, with overall EU chemicals capacity dropping 6% last year, compared to 2019.

Sales also fell dramatically during the year, according to Cefic, dropping €34.8bn in January-November 2020, compared to the same period in 2019.

Exports weakened €7.4bn, a 4.5% drop, as an uptick in public health-related chemicals demand failed to offset the decline in wider manufacturing output.

EU GREEN DEAL AMBITIONS
Cefic’s director general Marco Mensink said that the green shoots observed would need further support from policymakers for growth to be sustained.

“The chemical value chains to be among the most resilient in Europe. The industry stood up, rose to the expectations and has delivered valuable support on for example disinfectants supply,” said Mensink.

“Full recovery will need further support. A strong industrial policy does not only support the sectors in need, but also starts to build upon the sectors proven to be most resilient, who are the basis for tomorrow’s economy.”

As the EU embarks on the implementation of the Green Deal, which aims to decarbonise the economy by 2050, shying away from fossil fuels, Mensink said “massive investments” would be needed.

Ahead of the European Commission – the EU’s executive body – publication of a new industrial strategy, Mensink called on policy makers to keep chemicals at the centre of their plans for the manufacturing sectors.

“To secure the massive investments required for the Green Deal transformation of our industry, and to maintain the European chemical sector’s export success story, we look forward to the EU Commission’s new industrial policy strategy to provide the markets and conditions for industry to become more sustainable,” said Mensink.

In an interview with ICIS in September, Mensink had described the EU’s green ambitions as a “massive challenge” for the chemicals industry.

Front page picture source: David Chapman/imageBROKER/Shutterstock

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