BUDAPEST (ICIS)--European automotive linked petrochemical confidence on future conditions is at its lowest level since ICIS began compiling the Chemical Market Confidence Index (CMCI) in May, ICIS analysis showed on Saturday.
The fall in confidence came despite stabilisation in the wider petrochemical industry.
The drop in confidence is despite strong EU new passenger car registrations in August and strongly suggests that the automotive industry is expecting a downturn. This may be linked to the ongoing fragility of global macroeconomic conditions.
Confidence across all indicators fell in September with views on future order book volumes and future profitability seeing the largest month-on-month drops. Nevertheless, future order book volume confidence remains in positive territory, the only one of the six indicators to remain so in September.
The confidence index suggests that European chemical companies linked to car manufacturers are expecting a much tougher trading environment in the coming months.
Plunging automotive confidence is likely to be a key topic of discussion amid downstream market players at the 50th annual European Petrochemical Association (EPCA) meeting in Budapest 1-4 October 2016.
The newly 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
The automotive industry is a major global consumer of petrochemicals which contributes more than a third of the raw material costs of an average vehicle. ICIS tracks the movement of petrochemical raw material costs in auto production both globally and regionally with the weighted ICIS Basket of Automotive Petrochemicals (IBAP).
ICIS produces a monthly Global Automotive report covering the major automotive chemicals markets, the auto-industry, the IBAPs and macroeconomic trends. For more information on the report and details on how to subscribe, please click here
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