UK chemicals makers post decline in business sentiment

London – The UK chemicals industry remains under pressure with sales, production levels and capacity utilisation rates on the decline, a new survey has found.

The third-quarter poll by the Chemical Industry Association (CIA) shows that 86% of companies expect sales to 'remain the same' or 'decline' compared to three months ago.

Some 57% of respondents to the survey, held in September, reported lower production levels and capacity utilisation compared to the previous quarter.

Furthermore, domestic demand remains low with only 4% of businesses reporting an increase in their domestic sales, according to a 9 Oct CIA release.

Optimism, it added, remained low with over a third of respondents expecting performance to get worse, as industry prepares for winter energy costs.

According to the CIA, demand has weakened due to “tough internal economic conditions” and cheaper foreign imports saturating EU and domestic markets.

The survey makes "for grim reading, with nine out of ten businesses anticipating reduced or, at best, static sales and optimism drifting further out with each passing quarter,” said CIA chief executive Steve Elliott.

To address the challenges in the short term, the association leader said the industry’s cost-base must be "minimised", especially energy prices over the coming winter.

Furthermore, the sector should be able to secure “a more competitive net zero policy environment and funding landscape”.

These steps, Elliott said, will give a stronger platform for UK chemicals trade and investment growth as global economic conditions start to improve.

For her part, CIA economist Michela Borra said: “Coupled with production costs that remain over 20% higher than pre-pandemic levels, there is little room for medium-term optimism within the industry." 

The UK chemicals industry employs nearly 145,000 people and is claimed to be the country’s second biggest manufacturing exporter, generating €58 billion of overseas sales.