Cefic foresees ‘sluggish’ recovery for European chemicals industry

Brussels – The European Chemical Industry Council (Cefic) has forecast a ‘sluggish’ recovery for the EU chemicals industry,  reflecting the demand situation in the region.

In its first half review, Cefic reported that the trading challenges impacting European chemicals and polymers manufacturers had not eased as expected.

“That did not happen,” Cefic reported 6 Sept , noting that hopes for a business recovery after a mild winter and “much lower” gas and electricity prices did not materialise.

“In contrast, the demand for chemicals is still on the decline. The recovery will probably be slow and sluggish,” it added.

Citing a recent Oxford Economics report, Cefic predicted a tough second half for chemicals makers, with weak industrial demand continuing to weigh on new orders.

High interest rates, tighter lending conditions and inflationary pressures will impact the goods-producing industries that chemical firms sell, it explained.

As a result, Cefic forecast chemicals output to decline significantly over full-year 2023, as well as a decrease in sales, due largely to falling prices.

In terms of production, the EU27 chemicals output fell 12.3% year-on-year during the first half, with second-quarter production nearing the levels of early Covid lockdown in the second quarter of 2020.

“The results of this first half of the year are disappointing for most countries, as the spillover effect of the 2022 energy crisis are severely impacting most business sectors,” Cefic said.

The Netherlands and Germany were amongst the EU countries most impacted by the energy crisis, both recording a production decline of over 15%.

In terms of sales, the industry recorded a decline of 12.7% year-on-year to €285 billion for the first half, “with a persistently difficult earnings situation for companies.”

Overall, Cefic warned that the European chemical industry was losing competitiveness on global chemical markets, due mainly to “high regional energy and feedstock costs.”