BUDAPEST (ICIS)--European chemicals buyers are predicting that order book volumes and profitability will decline over the next 12 months, according to ICIS CMCI data recorded in the run-up to the European Petrochemicals Association (EPCA) meeting.
Modest projected improvements to the economic environment were the lone silver lining for chemicals buyers in the region surveyed by ICIS in late September.
Current order book volumes are seen as little changed from the same time a year earlier, but are expected to decline slightly over the next 12 months. Current profitability is seen to have improved slightly since September 2015, but is expected to decline over the next year.
The bearish sentiment comes despite modest improvements in the European economy after some sharper declines in the immediate aftermath of the UK’s vote to leave the EU.
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.
Expectations for future profitability and order book volumes both dropped during the month compared to the previous month, and stood at the lowest levels since CMCI data was first gathered in May.
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