European chemicals industry cautiously optimistic about 2024

Brussels – European Chemical Industry Council (Cefic) has signalled cautious optimism for chemicals output in the EU27, projecting possible growth in production of 1% next year.

The “flat-to-small growth” scenario comes after a challenging period marked by two years of back-to-back declines in output: year-on-year decreases of 7.6% and 6.35 in 2023 and 2022 respectively.

Cefic linked the production declines – especially of petrochemicals, polymers in primary forms, and basic inorganics – to surging energy prices and a significant decrease in the demand post-Covid.

“Inflation, decreasing purchasing power, along with a complex and costly regulatory agenda in Europe were additional contributing factors,” the association announced 15 Dec.

However, according to director general Marco Mensink, “there is now a first sign of recovery” although the costs of energy and feedstock continue to impact the industry.

For 2024, Cefic expects “a gradual normalisation of demand structures, shifting from an over-proportional focus on services in private consumption to a higher emphasis on goods.”

In particular, the industry body anticipates that a rise in purchasing-power, coupled with decreasing inflation rates and increasing wages will boost demand for chemicals-related goods.

Nevertheless, Mensink went on to emphasise that current high costs for producers in Europe are causing the industry to “lose its competitive edge in global chemical markets”.

While companies “look forward to investing again”, especially in the US and the Persian Gulf, he said investments in Europe “are under huge stress”.

“Key emerging economies are growing faster than the EU27 and the US, with China outpacing all others,” he said, noting that in 2022, China became the largest EU27 chemicals trade partner.

As a result, Cefic said, growth expectations in 2024 "remained limited”.

“Elevated interest rates continue to dampen demand in the construction sector, and the automotive industry is not expected to accelerate beyond the production levels achieved in 2023,” it added.

Therefore, the overall economic outlook for the EU chemical industry remains uncertain, the association cautioned