UK chemicals makers “facing unprecedented challenges”

London – Around half of Britain’s chemical companies have reported a decline in new orders and more than 30% have seen falls in sales, production levels and capacity utilisation.

That’s according to the findings of the latest quarterly business survey conducted by London-based industry body the Chemical Industries Association (CIA).

Feedback from over 40 leaders of UK chemical businesses tallies with the latest official statistics, confirming a 5.6% fall in production over the three months to September, the CIA reported 25 Nov.

Capacity utilisation rates, it added, have been hovering around 70% amid depressed demand and uncompetitive energy and carbon costs – often linked to UK government policy.

Furthermore, the CIA cited the impact of ongoing uncertainty over the long-overdue UK REACH regulation and a current landfill tax review on investment in the UK.

“Expectations for the fourth quarter do not point to a strong recovery, with most businesses anticipating sales, exports, and imports to remain broadly unchanged,” said Léa Charbonnier, the association’s economist.

Investment is expected to decline for around 40% of chemical companies, while over 30% foresee reductions in new orders, production levels, and capacity utilisation,” according to Charbonnier.

For CIA chief executive Steve Elliott: “Too many parts of the UK chemical industry are battling against an unforgiving business environment… and a hostile policy environment [causing] an increasing number of strategic reviews, profit warnings and site closures.”

This is despite recent recognition of the chemical industry in the UK government’s new ‘industrial strategy’ as a "key foundational sector, underpinning many of the identified growth sectors of the economy."

The strategy, concluded Elliot, needs to be "converted urgently into... more competitive energy prices, carbon reduction costs that are sensitive to our global competition and no more regulatory stones in the backpack.”