UK chemicals suppliers see margins “nosedive”

Crewe, UK – UK chemicals makers have reported a sharp fall in current and future sales margins despite recovery in order books and sales, according to the Chemical Business Association’s (CBA) latest Supply Chain Trends survey.

CBA’s Trends Survey asks companies to provide information on order books, sales, sales margins, and employment, on a ‘better–worse–same’ basis.  To measure short-term trends, the analysis ignores all responses answering ‘same’ and focuses on the positive or negative balance provided by the difference between the ‘better-worse’ responses.

CBA’s previous Trends Survey took place in June against a background of the Brexit vote and reflected the industry’s concerns about the uncertainty immediately following the referendum decision to leave the EU.

The survey, which based on responses from 42 member companies, asked if current order books were better, worse, or the same than in the previous three months, said a CBA press release issued 10 Nov.

The latest results showed a positive balance of +21% - a figure that returns to the levels of the March 2016 Survey.

Respondents were then asked to compare current sales volumes with the preceding three months and indicate their expectations for the next three months.

Current sales volumes, said the CBA, showed a positive balance of +24% to approach pre-referendum levels. However, while respondents registered a positive trend (+15%) in future sales volumes, the level was still below those reported in March 2016 (+30%).

CBA members are also asked to compare current margins with the prior three months and provide a forecast for the next three months.

The survey showed a positive balance of +17% companies believing that employment levels will increase over the next three months.

The CBA, however, concluded: “While trends in sales margins have been the most volatile aspect of these surveys, respondents experience of current sales margins and forecasts for future margins have turned sharply negative.”

The survey, it added, “shows a negative balance of -33% in terms of current margins and a negative balance of -35% in relation to the trend for future margins.”

The CBA’s membership includes distributors, traders, warehouse operators, along with logistics and transport companies that interface with thousands of UK downstream chemical users.