Belgium: Chemical Production Positive Short-Term Outlook for EU Chemical Sector

Editor: Alexander Stark

Cefic Chemical Trends Report (CTR) — a monthly economic snapshot of the European chemical sector in Europe — shows a spike in output in many chemical subsectors during the first two months of 2017 (year-on-year).

Related Companies

According to a Eurozone economic outlook report the prospects for global economic activity improved in recent months, despite political uncertainty and increased inflation. These positive signs are reflected in the latest Cefic Chemical Trends Report (CTR).
According to a Eurozone economic outlook report the prospects for global economic activity improved in recent months, despite political uncertainty and increased inflation. These positive signs are reflected in the latest Cefic Chemical Trends Report (CTR).
(Source: BASF SE)

Brussels/Belgium — According to the report, chemical output increased during January-February 2017 compared to the same period of 2016 for most subsectors. Production saw an increase in dyes and pigments (1.6 %), plastics in primary forms (4.7 %) and industrial gases (8.6 %).

However, output saw a decline in subsectors like synthetic rubber (-3.5 %), fertilisers (-2.3 %) and petrochemicals (-1.5 %. All in all, output in EU chemicals sector grew 1.6  % during the same period.

For those sectors that increased their production, the increase is not necessarily matched by buoyant profits. 2016 data shows clearly that the decline in producer prices (-3.6 %) affected significantly EU chemicals sales (-2.1 %) and then profits.

Trade Figures

Trade figures for 2017 compared to 2016 showed less positive signals. In polymers, Extra-EU exports in value went down by € 0.9 billion in 2016 compared to 2015. The same goes for basic inorganic and specialty chemicals. Exports outside the EU went down by € 133 million in 2016/2015. Imports went down by 3.4 % (€ 3.4 billion less in 2016 compared to 2015). The overall increase in trade surplus is not due to better export performance but due mainly to a strong decline in imports.

Challenges for Long-term Business

In Q1 2017, the business climate also improved for the EU chemical sector and the total demand experienced by chemical companies is up. Cefic expects this relative positive trend to last beyond this quarter. Following years of stagnation since the economic crisis, the chemical industry is as close as it has been to pre-crisis production levels, 3.6 % below Q1 2008 instead of 4 to 5 %. Overall, output growth was less than 1 % during the last five years (2012 - 2016), which shows that the chemical sector in Europe will have to find new ways to deliver strong growth for the long-term. The EU chemical industry is losing market share and long-term output growth due mainly to energy and feedstock costs compared to other more competitive regions.

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