Chemical production in the EU has declined by an estimated 1% in 2019 and will likely stay at the same level in 2020, according to Cefic. Weakening production reflects the economic and geopolitical challenges faced by the industry.
“The chemicals business climate has been affected this year by slower global economic growth, political uncertainty around Brexit, and ongoing trade conflicts,” Cefic says. “Demand for chemicals was also lower this year than in 2018 as several key chemical-buyer industries—automotive, electrical appliances—significantly reduced their output in 2019.”
EU chemical output grew in the first quarter of 2019 but turned negative in the second and third quarters as demand weakened in key industries, Cefic says.
The outlook for 2020 is shrouded in uncertainty. “While rising real incomes should keep demand in manufactured goods stable, the continuous political uncertainty and hostile trade environment are unlikely to promote significant growth,” Cefic says. Production expectations for the coming months and total order books “do not show significant improvement,” Cefic says.
One source of optimism is the EU construction industry, which has posted stable output growth of 2.5% in 2019 and is expected to register a similar growth rate next year. “Since the chemical industry provides many solutions and technologies for infrastructure and energy-efficient buildings, demand for chemicals in this sector is set to grow,” Cefic says.
Europe remains the second-biggest producer of chemicals behind China. The EU chemical industry has generated sales of €565 billion ($633 billion) in 2019 and the rest of Europe has recorded chemical sales of €129 billion, out of a world total of €3.35 trillion, Cefic says. “Despite slightly weaker growth forecasts, Europe remains the second-largest chemicals producer in the world,” says René van Sloten, executive director/industrial policy at Cefic.
Van Sloten calls for a regulatory framework and support for innovation in the EU that enables the chemical industry to achieve its growth potential. “Our competitive advantage and future growth could come from specialized, higher-value-added products and solutions for a climate-neutral and circular economy if we have the right EU policy framework and sufficient support for innovative chemistry in place,” he says.
By Ian Young
Source: Chemical Week
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