EU Chemical Industries EU Chemical Industries Gain 3.4 Percent Growth
Europe's chemical branch is well positioned with a solid growth of 3.4 percent, states a recent market report by the Industry council Cefic. Current turbulences in the Middle East, the Eurozone and the US nevertheless cloud the forecast.
Brussels/Belgium – Europe's chemical industry recorded a 3.4 percent production increase in the first half of 2011, says a new market report by the European Chemical Industry Council Cefic. With a decline of 1.2 percent decline compared with June 2010, the EU chemical industry witnessed a modest downturn after an impressive first three months of 2011, due to recent insecurities in the global economy. The prices for chemicals meanwhile continued their upward climb driven by rising energy prices and the volatility on the commodity markets: chemical prices went up by 9.6 percent compared with 2010. Year-on-year EU sales surged upward by 22.9 per cent in May, and increased by 19.2 per cent during the first five months of 2011.
“The pace of EU chemicals industry output decelerated slightly in the second quarter of 2011 as the weak world business climate and turbulence in the eurozone played a significant role,” commented Cefic Chief Economist Moncef Hadhri. Currently, the EU chemicals production 18 percent above its depths in December 2008, on the height of the economy crisis. Petrochemicals could even gain a solid 4.1 percent above the previous year, despite the effects that the current situation in the Middle East and the outage of Lybia's oil production. Basic inorganics production rose slightly by 1.7 per cent.
Speciality chemicals, problem child of the industry, could not profit from these otherwise pleasant development: their production fell by significant 41.1 percent. Also the European polymers production lost about one percent compared with 2010. Consumer chemicals, nevertheless, did quite well with production rising by 4.6 per cent in June.
Chemical Industries Gains € 17 Billion Trade Surplus
According to Cefic analyses, the EU's foreign trades could gain a solid € 17.2 billion trade surplus for its chemicals sector in the first five months of 2011. Still this value is 9.3 percent short of the same period in 2010. Recent trade data indicate a € 4.4 billion net trade surplus with the NAFTA region and € 3.1 billion surplus with Asia, excluding Japan and China, between January and May 2011. Trades with China resulted in a € 1 billion net trade deficit. Most of Europe's chemical production is still bought by European customers: trade flows with the Rest of Europe generated a €5 billion surplus - the highest level for all markets.
Chemical Industry's Sales Surpass 2008 Pre–Crisis Peak
The heyday of this development was reached in May 2011, when chemical sales were 22.9 per cent higher than a year before. A similar situation was witnessed for EU domestic sales, which improved by 21.3 percent during the first five months of 2011. Despite the recent developments since June, overall sales still surpass the early 2008 pre–crisis peak by 5.8 percent, Cefic says.
The Prices for petrochemicals increased steeply by 14.7 percent during the past year. But also inorganics and plastics (both about eleven percent above the previous year's value) saw sharp price increases. Consumer chemicals increased only moderatly by 3.2 percent in June (compared with prices from June 2010).
A Cloudy Forecast for the Chemical Industry
Analysts expect a clouded future: After good economical data fro the first half of 2011, the Ifo's World Economic Climate displays open scepticism. The Economic Sentiment Indicator (ESI) declined in July (but is still above its long term average). The unstable situation in the Middle East, the debt crisis in the US and the EU and current insecuristies on the financial market had their toll on the EU's industry's confidence: Among the seven largest EU Member States, confidence in Italy fell the most (-4.5), followed by Spain (-2.7). The confidence indicator fell less significantly in the Netherlands (-2.1), Germany (-1.8), the UK (-1.4) and France (-0.5), while it improved slightly in Poland (+0.4). Only in France and Germany could the ESI stay above its long-term average.
Also the utilisation of production capacity declined in the EU states, although somewhat more heterogenously, interrupting the two-year upward trend since the trough in July 2009. EU core members like Germany remained firmly well above the long-term average while peripheral countries are lagging behind. Wether this development will affect Cefic's annual forecast for 2011 was not commented.