EU chemicals sector sees ‘slow recovery’ amid sluggish orders

Brussels – European chemical industry is making a slow recovery, having moved beyond its ‘ultimate low output and capacity utilisation’, according to latest data by the European Chemical Industry Council (Cefic).

Overall, Cefic in its June’s edition of industry review, "the chemicals business climate appears to be more stable and production continuing to rise."

Output in the first quarter of the year was up 2.4% year-on-year and 1.8% sequentially, marking the third consecutive quarter of growth.

Capacity utilisation rate improved marginally from 74.4% in the third quarter of 2023, to 75.5% in the first three months of the year.

The figure, however, remains well below the long-term average of 81.4% utilisation rate, Cefic noted.

During the first four months of the year, the chemicals industry reported a 2.6% year-on-year increase in production, achieving the highest growth rate in output across the EU.

Rubber & plastics industries reported a 2% year-on-year decline during the period, according to Cefic.

Overall, top performers included Spain, The Netherlands, France and Germany, reporting year-on-year production increases of 6.8%, 3.8%, 3.1% and 2.9% respectively.

“Italy and a few other member states,” reported declines during the four-month period.

Despite the positive signs of recovery, Cefic remained cautious about the significant increase in chemical volumes.

The association noted that this rise could still be linked to short-term restocking rather than "a stabilised demand and ongoing recovery."

According to Cefic, "a lack of orders and cost problems continue to impact the mood" among European chemicals companies.

However, the June edition noted that chemical managers’ opinion on order books was slightly up, “but still reflects limited demand.”

To conclude, Cefic said the encouraging numbers “should be taken with a grain of salt,” given that 2023 was a low benchmark for comparison.

“A strong recovery in 2024 is unlikely when most of the chemical industry’s downstream users – rubber & plastics, textiles, construction, computer production – are still showing downward trends,” it added.