Cefic Chemicals Trend Report EU Chemicals Sector Sluggish in First Half of 2014
European chemicals output dipped in June 2014 for the second straight month, according to the latest Cefic Chemicals Trends Report. Despite the dip in May and June, output grew by 0.6 percent year-on-year in the first six months of 2014. In the first half of 2014, EU chemicals prices were lower, whilst sales during the first five months of 2014 remained unchanged. Net exports of EU chemicals reached € 18.6 billion for the period from January to May, the region’s chemicals trade surplus continued its downtrend.
Brussels/Belgium – European chemicals output fell in May 2014 after eight consecutive months of expansion, according to the latest Cefic Chemicals Trends Report. Despite the May blip, output expanded by 1.8 percent in the first five months of 2014 on a year-on-year basis. EU chemicals prices were lower during the five month period, whilst EU chemical sales during the first four months of 2014 remained unchanged.
The sector’s workforce grew in first quarter 2014, the second consecutive quarter of payroll expansion. EU chemicals net exports reached € 14.8 billion for the first four months of 2014, but the surplus level narrowed as compared with the year prior. Cefic Director General Hubert Mandery said: “Upticks in chemicals output and employment are welcome news, but signs point to the sector losing its footing in the global market. EU policy can help boost our competitiveness, especially by addressing the energy cost gap.”
Year-on-year output climbed 0.6 percent
Overall chemicals output climbed 0.6 percent between January and June 2014 compared to the same period last year. In the second quarter of 2014, production declined by 1.2 percent year-on-year. The data from June, however, show EU chemicals output declining for the second time after eight consecutive months of growth. Only consumer chemicals bucked the downtrend: output from all other subsectors was lower in June 2014 than in June 2013.
Petrochemicals output continued to slide, falling 6.6 percent during the first six months of 2014 compared to the same period the previous year. This decline was partially offset by 3.7 percent output growth of specialty chemicals and a 1.3 percent uptick in consumer chemicals. Polymers grew by 1.0 percent year-on-year, whilst basic inorganics edged up slightly by 0.4 percent.
Prices continued to show marginal declines in June 2014, falling 0.5 percent compared with the same month last year. Petrochemical prices fell 1.6 percent during June, bringing the markdown during the first half of the year to 3.5 percent, year-on-year. Plastics prices were 0.2 percent lower in June 2014 compared to June 2013. The price of consumer chemicals, however, increased by 0.4 percent. Year-to-date figures show first half 2014 EU chemical producer prices slipped 2.0 percent compared to the first half of 2013.
Total EU chemicals sales during the first five months of 2014 remained practically unchanged compared with the same period last year, just 1.4 percent higher than the pre-crisis full-year peak reached in 2008. May sales declined by 1.8 percent compared to the same month the year before.
Net trade surplus down by € 2.2 billion in the first five months
The EU had an € 18.6 billion net trade surplus in chemicals during the first five months of the year. It was led by a € 5.0 billion positive trade balance with non-EU countries in Europe, which includes Russia. The figure was € 1.4 billion lower in the period January to May 2014 than the same period in 2013. The EU chemicals trade surplus with Asia – excluding Japan and China – grew by a scant € 100 million. The EU net chemicals trade surplus with China narrowed slightly to € 605 million. The United States further shrunk its chemicals trade deficit with the European Union by € 437 million to € 2.6 billion during the five-month period.
The EU chemical industry confidence indicator (CCI) waned in June, as company overall order books continued to soften. Output expectations for the months ahead showed a significant improvement yet there appears to be no sign of improvement in EU export order books or employment expectations. Second quarter 2014 capacity utilisation in the EU chemicals sector was 80.6 percent, down from 81.2 percent in first quarter 2014. It remains 4.5 percentage points below the post-crisis peak recorded in the first quarter of 2011, and only 1.1 percentage points below the long-term average from 1995 to 2013.