Growth is returning to the EU chemical industry, according the European Chemical Industry Council (Cefic). ‘We anticipate output in the chemicals industry [excluding pharmaceuticals] to grow by 9.5% in 2010, and our expectations for 2011 point to a growth of 2%, compared to 2010,’ says Hubert Mandery, Cefic director general.
The dramatic reduction of the growth estimate for 2011 is attributed to Cefic’s expectation of a period of consolidation in the period from H2 2010 and early 2011. Despite this resurgence, however, Cefic says that output at the end of 2011 will still be below previous levels, which are not expected to be reached for at least the next two years. Cefic points out that in 2009 output dropped by 11.3%, despite an almost equally sharp rebound in H2 2009.
According to Cefic, basic chemicals are now registering the fastest rebounds, but for all sectors the growth in production has continued more strongly and for longer than expected when Cefic published its forecast in November 2009. Capacity utilisation still remains below normal levels, however.
Cefic believes there are still significant uncertainties in the economic environment. Any defaults on sovereign loans could trigger renewed problems in the banking sector, which would then affect the chemical sector’s recovery.
‘The European chemicals industry continues to face relentless global competition,’ says Mandery. ‘Access to raw materials and energy at globally competitive prices remains a prerequisite for a successful recovery.’
This picture of recovery is echoed by the latest revised estimates from Oxford Economics, whose short term output figures have been mainly upgraded following the strong Q1 2010 figures. The exceptions, however, are the UK and Japan where weak pharmaceutical developments have pulled the numbers down this year and countries, such as Greece and Spain, suffering from severe economic problems, where numbers are going to be lower over the next few years.
UK consultant Oxford Economics estimates that, despite the UK’s poor performance in 2010, the EU15 countries may grow by 7.5% in 2010 and 3–3.5% over the next three years but may fall to below 2% by 2020. Excluding pharmaceuticals, the rise would be more like 10.75% for 2010. Pharma output in the EU15 is only expected to reach 3.5% in 2010, continuing at 3.5–4% in the period to 2016.
World production rose strongly again in Q1 2010, says Oxford Economics, with a total increase of 12% over the last four quarters. All the major regions have contributed to this growth with China leading the way. In terms of specific sectors, basic chemicals, manmade fibres and paints are the strongest performers, leading the rebound. There is a word of caution, however, in that with much of the restocking over, the pace of expansion may halve over the next 12 months, especially in commodity chemicals.
Despite this warning, Oxford Economics still believes world output will grow by 8.5% in 2010, with developed countries seeing close to 6% growth, compared with double that level in the developing world. In 2011/12, overall growth may slip back to 6%, with the developed world experiencing around 4% growth, slipping to 2.5%, and the emerging markets enjoying over 9% before dropping to below 7% by the end of the decade.