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European Chemical Industry Review

European Chemical Industry Review

Author: Marketscale/Wednesday, October 12, 2016/Categories: IPP News

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The chemicals industry across the world is constantly in flux. A recent report by the European Chemical Industry Council (CEFIC) shows the competitive pressures on the European chemicals sector continue to rise despite a growing global demand for chemicals and improvements to the environmental and energy efficiency performance. 

“It is crucial for Europe to enable this sector to innovate and transform from the existing asset base, to allow it to act as enabler of key materials and supplier for other sectors in Europe, all in the next decades,” says Marco Mensink, incoming CEFIC Director General. “90% of global GDP will happen outside the EU in the coming decades, of which we need to take our share.” 

Where is this increasing industry pressure coming from? China and the United States are booming. IPPE takes great care to keep a finger on the pulse of the global chemical industry. Based in the U.S. and operating in many countries across the globe, including Argentina, Australia, China, Czech Republic, India, and the United Kingdom, IPPE is the worldwide leader in purchasing and recycling industrial process plants and an active participant in the industry’s international dynamic.

Business conditions and profitability expectations for the next 12 months in the European building block chemicals sector were strong in July, but have dropped sharply in both August and September according to the ICIS Chemical Market Confidence Index (CMCI). In conjunction with the underwhelming news from the European chemicals industry, which makes up 17% of the global chemical output, the CEFIC says that making ethylene, a major chemicals building block, is twice as expensive in Europe as it is in the U.S., “boosting profits abroad and attracting billions of dollars of investment, which Europe is missing out on.”

With an ambitious industrial policy strategy plan to take its chemical industry to the next level of development, China continues to dominate the world ranking. On the other side of the Pacific, the American shale gas boom has laid the groundwork for a U.S. chemical industry revival.  Europe, on the other hand, struggles with high energy and feedstock prices and a complex regulatory environment which have had a significant negative impact on its chemical industry.

The future development for the industry also points away from Europe, with Asian markets receiving the majority of the focus. Global management consulting firm A.T. Kearney published its views on the future of the global chemicals industry, anticipating a 3% global industry growth over the next 20 years bolstered by the Asian and Middle Eastern players, and an expected growth rate in Europe of only 1%. A.T. Kearney supports its projections by citing the surging Asian chemical industry as the leader in the growth rate over the past 25 years, and expects this trend to continue into the future, placing even more pressure on its European competitors.

Regardless of the changes in the CMCI, the European chemical industry is an integral component in the development of international economic wealth, providing materials and finished products, and enabling technical solutions in nearly every sector of the economy. The overall CMCI for September implies the sector is stabilizing in comparison to the previous few months of noticeable volatility. Perhaps this is an indication of a turnaround in the European chemicals sector; only time will tell. 

 

Learn more about industry outlooks, our current inventory, and more at IPPE.com.

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