Re-stocking brightens mood for EU chemicals industry

Brussels – EU chemicals makers has noted gradual improvements in production levels in the early months of 2024, but have yet to see signs of ‘serious growth in demand,’ Cefic has reported

In its latest economic survey, the chemicals industry body found “a significant increase in confidence” across the EU27, with sustained optimism about orders during the first quarter.

“Managers’ opinions on the current level of overall order books continued to move in the right direction,” commented Cefic in its analysis of the survey.

The indicator on export orders is also showing “some encouraging signs”, said Cefic, though adding that it was “too early to say that demand is gradually back to the normal level.”

Chemicals makers reported a 0.4% year-on-year increase in production over the first two months of the year – compared to a 6% year-on-year decline across EU manufacturing output overall.

However, Cefic noted that the chemicals industry was still being impacted by a lack of demand growth, as well as high regional energy and feedstock costs.

The slight increase in volumes “must be analysed with a lot of caution,” said the association, adding that growth could be linked to "short-term restocking.”

Therefore, it warned, the uptick “must not be perceived as [an indication of] stabilised demand and ongoing recovery.”

Cefic went on to say that recently announced closures of cracker units show that EU chemicals production “faces more structural challenges rather than business cycle issues.”

On a similar note, it pointed out that Chinese chemicals exports to high-cost Europe had continued to increase over last year and, so far, into this year.

The trend, according to the industry body, is “primarily due to overcapacity in China" and that country's "favourable cost position.”