Cefic sees ‘weak start’ in EU chemicals industry despite signs of recovery

Brussels – The European chemicals sector has had a ‘weak start’ to 2024 overall, except from the food and beverage segments, according to the European Chemical Industry Council (Cefic).

With a 1.1% year-on-year decline in production in January the EU27 chemical industry reported the second-lowest drop among the manufacturing sectors, Cefic reported 5 April.

January chemicals production level remained on a par with December 2023, Cefic in its March edition of chemical trends monthly.

“The European chemical industry production volumes are still not recovering due to lack of demand growth, coupled with high regional energy and feedstock costs,” it added.

Confidence in the European chemicals sector, meanwhile, has been seeing an upward trend over the recent months amid a recovery in trade balance due to “destocking coming to an end”.

February saw chemicals production expectations go up for the first time since November last year, said Cefic citing the latest EU economic survey.

Cefic welcomed the ‘positive trend’ despite it being “certainly weak compared to the pre-crisis level.”

Meanwhile, the assessments of the stocks of finished products decreased for the fifth consecutive month in row.

As a result, managers’ opinion on the current level of overall order books continued to move “into the right direction, and showed a gradual improvement vs the mid-2023 low.”

Overall, Cefic continued to voice its concern over the industry’s position globally.

Europe, it said, was impacted by the energy crisis than other regions, mainly due to structural issues which need to be addressed.

According to Cefic, the EU chemical industry has been gradually losing its competitive edge in the global market, due in part to being very energy-intensive.

“High energy costs are the Achilles heel of our industry, especially when compared to the United States and Middle East which have the advantage of lower energy costs,” it added.

But according to Cefic, energy costs are not the only contributing factor.

Regulatory uncertainty, unclarity about de-risking schemes for innovations, and overall lack of confidence and predictability in Europe’s industrial policy are hindering investment in the region.

“To ensure Europe becomes an interesting place for investment, we need a business case, as called for in Antwerp Declaration for a European Industrial Deal,” Cefic added.