Chemical Industry Outlook Modest Growth in Challenging Times: An Outlook on Europeans Chemical Industry in 2016

Editor: Dominik Stephan

Declining demand from key industries, competition from third countries and economic slowdown in important export markets put Europe’s chemical industry under pressure. Thus, market insiders and associations expect only modest growth for 2016…

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Cefic Director General Hubert Mandery said: “Although we are forecasting a slight uptick compared to the previous year, the conditions under which this modest growth took place – such as low oil prices and a favourable Euro/USD exchange rate - cannot be expected to last indefinitely.”
Cefic Director General Hubert Mandery said: “Although we are forecasting a slight uptick compared to the previous year, the conditions under which this modest growth took place – such as low oil prices and a favourable Euro/USD exchange rate - cannot be expected to last indefinitely.”
(Picture: Cefic)

Brussels/Belgium – After a sluggish 0.5 % percent growth for EU chemical production in 2015, the European chemical industry association expects not more than a modest 1% growth in 2016, as the industry’s environments prove to be challenging: Manufacturing growth in the European Union grew only moderately, while construction growth was slower than expected in the current low-interest rate environment. Only the automotive industry over-performed in 2015, impacting demand for certain chemical products. Looking ahead, growth in industries such as food and beverages, and construction are expected to offset relatively any downturn in the automotive sector.

Hubert Mandery, Cefic Director General, said that, “Although we are forecasting a slight uptick compared to the previous year, the conditions under which this modest growth took place – such as low oil prices and a favourable Euro/USD exchange rate - cannot be expected to last indefinitely”. He emphasised the need for EU policymakers to support the competitiveness and innovative capacity of the European chemical industry.

In 2015, growth in global demand for intermediate chemical inputs slowed significantly as manufacturing growth decelerated to only 2%. Especially Asia, the economic driver of the past decade witnessed declining growth rates in key markets, such as India and China. Also, Brazil and Russia are dealing with strong recessions and will not drive industry demand in 2016, the analysts assume.

Even the low prices of commodities and raw materials are no game changer for the EU’s chemical sector: Although low oil prices and a weak Euro/USD exchange rate supported growth of European chemical exports, aggregate growth in global demand was too weak to significantly accelerate for chemicals.

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For 2016, industry experts a moderate growth, as gross domestic product in the EU is expected to stabilize. Although growth in European manufacturing might be somewhat weaker next year due to softer growth in the automotive industry – following two years of strong recovery – other industries are expected to strengthen and should balance demand for chemicals. Finally, the favorable Euro exchange rate should act as a driver of chemical exports.

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