Small Growth Predicted for European Chemical Industry

Market Scenario Small Growth Predicted for European Chemical Industry

2023-12-19 Source: Press release Cefic 2 min Reading Time

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Cefic has predicted a possible 1.0 % growth in EU27 chemical output for 2024. The small growth comes after a prolonged and challenging period in 2023 and 2022.

Key emerging economies are growing faster than the EU27 and the US, with China outpacing all others. (Source: Shutter2U - stock.adobe.com) — Key emerging economies are growing faster than the EU27 and the US, with China outpacing all others.
(Source: Shutter2U - stock.adobe.com)

Brussels/Belgium – The European Chemical Industry Council (Cefic) carefully projects a possible 1.0 % growth in EU27 chemical output for 2024. This flat to small growth comes after a challenging period marked by a decline of production by 7.6 % in 2023 and 6.3 % decrease in 2022.

The decline in European chemical production over the past years – especially where petrochemicals, polymers in primary forms, and basic inorganics are concerned – can be attributed to the well-known surge in energy prices and a significant decrease in the demand of goods in the aftermath of the Covid pandemic. Besides the automotive sector, other domestic customer industries also experienced a slowdown in 2023. Inflation, decreasing purchasing power, along with a complex and costly regulatory agenda in Europe were additional contributing factors.

Commenting on the outlook Marco Mensink, Cefic Director General said, “The current lack of demand is impacting the chemical industry across the world. When the value chain disruptions and impact of inflation have been processed in global markets, there is now a first sign of recovery. However, the energy costs are still the Achilles’ heel of the European chemical industry and no other region in the world has the same impact. This, along with high feedstock costs, is causing the industry to lose its competitive edge in global chemical markets. Where in other regions companies look forward to invest again, especially in the USA and the Gulf, investments in Europe are under huge stress. The impacts of the US IRA are only just beginning to be felt across the globe."

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Key emerging economies are growing faster than the EU27 and the US, with China outpacing all others. In 2022, China became the largest EU27 chemicals trade partner, multiplying trade dependency with China by 4.5.

Looking ahead to 2024, Cefic expects a gradual normalization of demand structures, shifting from an over-proportional focus on services in private consumption to a higher emphasis on goods. The anticipated rise in purchasing power, coupled with decreasing inflation rates and increasing wages, is expected to boost private demand. As demand increases, the industry projects customers to spend more on goods.

However, growth expectations for 2024 remain limited. Elevated interest rates continue to dampen demand in the construction sector, and the automotive industry is not expected to accelerate beyond the production levels achieved in 2023. Therefore, the overall economic outlook for the EU chemical industry remains uncertain.

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