Europe producer confidence in future order book volumes hits record high – Nov CMCI

LONDON (ICIS)–The ICIS Europe Chemical Market Confidence Index (CMCI) showed that producers’ confidence in November rising order book volumes over the next 12 months hit its highest level since ICIS began charting sentiment in May, ICIS analysis showed on Wednesday.

Sentiment on current order book volumes compared with 12 months ago, and order book volume expectations over the next year both rose sharply following steep falls in October, as fears of a decline in manufacturing resulting from macroeconomic volatility were partial assuaged by more positive data in the wake of both the US election and Brexit vote results.

Despite this, confidence in future business conditions did decline in November – highlighting the continued uncertainty – albeit remaining in positive territory, despite increased confidence that this may not impact on underlying demand levels.

Views on current profitability also declined in November, turning marginally negative from a strong positive base in October, which may reflect the difficulty in passing rising upstream costs through the chain.

Petrochemical demand typically slows in the approach to Christmas as players destock to reduce working capital on year-end balance sheets, making it harder to pass-through higher costs.

Expectations on future profitability returned to positive territory in November following sharp falls in October, but this was a marginal swing from slightly negative in October to slightly positive in November and represents a confused outlook.

Producers views on future profitability have been positive in five of the last seven months, while views on current profitability compared to last year have been negative in five out of seven months, suggesting that expectations of margin growth may be linked to an expected recovery from a low starting base.

ICIS is considering changing the methodology of the CMCI from January to track future expectations 6 months ahead instead of 12 months ahead. If you have any views on this, please contact Mark Victory at mark.victory@icis.com.  The December CMCI will be published in the first week of January.

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