Europe’s chemical industry is reinventing itself to stay competitive as high energy prices continue to cripple the sector and its share of the global market declines. These were some of the messages delivered at the Cefic General Assembly just ended in Paris and in discussions on the sideline of this industry meeting.
Cefic has meanwhile confirmed CW’s exclusive story that Jean-Pierre Clamadieu, CEO of Solvay is the next president of Cefic. He succeeded Kurt Bock, chairman of BASF, whose tenure as Cefic president ended today. Bock continues as president of the International Council of Chemical Associations (ICCA) until the end of the year to be succeeded by Mark Rohr, CEO of Celanese.
Clamadieu outlined his goals for the next two years and stressed that it was vital for Europe’s 29,000 chemical companies and their 1.2 million employees to stay competitive. Overall, investment in European chemical production is falling and some European industrial value chains are at risk. “If present trends are to be reversed, European authorities should ensure that all EU policies and initiatives take full account of the world’s economic realities and underpin the aim of increasing Europe’s competitiveness. We welcome the new European Commission’s priorities for growth and jobs creation, which we hope will be backed by the European Council and European Parliament,” Clamadieu said.
Hubert Mandery, Cefic’s director general gave an overview of the sector and trends in the industry. He said that Cefic has adjusted its forecast for 2014, and now expects chemicals output to expand only by 1.5%, revised downward from forecasts in June, which predicted 2% growth. “For 2015 we stick to our June forecast of 1.5%, based on the expectation that the pace of growth will stabilize during the remainder of 2014 and in 20015. However, current leading indicators suggest that the risk of decreasing growth is rising,” Mandery said.
European chemicals production was flat in the first seven months of this year and production volumes contracted again in July. EU chemical prices were lower, whilst the value of sales levels during the first seven months of the year remained unchanged. Net exports of EU chemicals reached €22.5 billion ($28.7 billion) for the first half of 2014, slipping from last year’s all time record. By end-July, European chemicals sales were only 1% above the peak achieved in 2008.
“The long-term trend shows European Chemicals output is still growing but that our region continues to lose global market share to emerging markets like China and to the US. Last year, global chemicals stales reached €3.16 trillion, of which Europe’s share, in terms of sales, was 17%, down from more than 30% ten years ago,” Mandery said. He cites EU’s high energy and feedstock prices and regulatory burden, which adds to costs that other regions don’t face.
Kurt Bock, the outgoing president, called on European leadership to take a global view to boost industrial growth, because European industry has to compete in global markets. “Today, the industrial sector contributes only some 15% to European GDP. To restore its economic health, the EU has set the ambitious goal for industrial activity to contribute 20% of GDP by 2020. That’s a bold goal. Yet the reality is that investment in primary production is falling. Europe is failing to keep pace with technology advances in some areas and some of today’s European industrial value chains are at risk,” Bock said.
The European chemical industry reinvents itself once every 20-30 years and it is now going through such a phase because of the pressures it is under, Mandery said. This means that companies are switching increasingly from energy-intensive, basic processes to value-added, less energy-intensive product portfolios.
Natasha Alperowicz in Paris