Trend Report EU Chemicals Sector Grew Modestly in the First Nine Months of 2014
European chemical output grew by just 0.9 per cent during the first three quarters of 2014 on a year-on-year basis, according to the latest Cefic Chemicals Trends Report. EU chemical prices were lower, whilst sales during the first eight months of the year were unchanged. In 2015, the chemicals output is expected to continue growing.
Brussels –Latest monthly chemical output data show scant growth in September, up only 0.2 per cent compared to September 2013. Net exports of EU chemicals reached €26.2 billion for first seven months of 2014, slipping somewhat from last year’s record. By end-August, European chemicals sales were only 0.8 per cent below the peak achieved six years ago, in 2008. Chemical industry confidence and capacity utilisation reached their highest level in three years.
Sluggish growth during the first three quarters of 2014 was caused by further contraction in petrochemicals output, down 2.8 per cent during the first nine months of 2014 compared to the same period the year before. The decline was partially offset by 3.3 per cent growth in specialty chemicals and 1.8 per cent expansion in consumer chemicals. Polymers grew by 0.8 per cent year-on-year, whilst basic inorganics output added 0.3 per cent. Chemicals production in the third quarter of 2014 was 6.7 per cent below the pre-crisis level registered in the first quarter of 2008.
Sales Remain Flat
Total EU chemical sales during the first eight months of 2014 remained nearly unchanged compared with the same period last year, just 0.8 per cent higher than the pre-crisis full-year peak reached in 2008. August sales fell by 0.1 per cent compared to August 2013. EU chemical producer prices dropped 1.7 per cent during the first three quarters of 2014 compared to the same period the year before. Overall chemical prices fell 1.3 per cent in the year to end-September.
The EU had a €26.2 billion net trade surplus in chemicals during the first seven months of 2014. It was led by a €7.1 billion positive trade balance with non-EU countries in Europe, a group including Russia, Turkey and Switzerland. Yet this balance was €1.8 billion lower in January-July 2014 than the same period of 2013. The EU chemicals trade surplus with Asia – excluding Japan and China – grew by just €186 million. The EU’s net chemicals trade surplus with China contracted slightly to €261 million. The United States further narrowed its chemicals trade deficit with the European Union by €396 million to €3.5 billion during the seven-month period.
Confidence reaches highest level in more than three years
The EU chemical industry confidence indicator (CCI) soared in October, reaching its highest level since July 2011. Chemicals order books and output expectations components of the CCI were significantly higher in October 2014 compared with September. Similar improvements occurred in other forward-looking CCI indicators, including production, exports order books, and stocks.
The Employment expectations component was at its most positive since April 2012. EU chemicals sector capacity utilisation swelled in the third quarter of 2014 to 81.3 per cent, the highest level since the third quarter of 2011. However capacity utilisation remains 3.7 percentage points below the post-crisis peak recorded in the first quarter of 2011, and only 0.2 percentage points below the long-term average from 1995 to 2013.
Chemicals output is expected to continue growing in 2015, although expectations about the pace of European and global economic growth have weakened over recent months. We now expect EU chemical production to expand by 1 per cent in 2015, against 1.5 per cent foreseen earlier.