EPCA ’16: Europe chems producers upbeat on future business, profits in September – CMCI
Tom Brown
01-Oct-2016
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.
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).
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
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