Cefic warns of ‘competitive disadvantage’ as EU chemical market share declines

Brussels – The European chemicals industry remains at a “competitive disadvantage” compared to the US, China and the Middle East with cost of production being significantly higher than the rest of the world, the European Chemical Industry Council (Cefic) has warned.

Presenting 2024 facts & figures, Cefic said high energy, regulatory, labour and feedstock costs put the EU at a disadvantage compared to its global competitors.

Cost of ethylene production in Europe, for instance, was 3.2 times higher compared to the US in 2023, Cefic reported 24 Jan.

The industry employs over 1.2 million people and reported a turnover of €655 billion and €10.2 billion R&I investments in 2023, the report added.

However, Cefic noted that over the past two decades the industry had lost significant market share to competition from China and the US.

Currently, EU27 hold global market share of 13% in chemicals industry, down from 28% in 2003, Cefic reported.

Breaking down the segments, Cefic said petrochemicals and specialities accounted for more than half of the EU chemicals sales in 2023, with synthetic rubber contributing 1% to the total turnover.

Fluctuating around 75%, capacity utilisation remained “well below” historical average of 81%, noted Cefic.

Europe maintained a positive trade balance, but exports did not grow “at the same pace as the global market,” the report added.

Furthermore, Cefic said it observed “a shift of manufacturing to regions in Asia, with China outpacing all others.”

China’s average production growth was 6.7% per annum over the 10 years to end of 2023, while the EU witnessed a 0.8% annual decline during the period.

Russia and India also posted positive trends in production during the decade, while Japan, the US and Brazil had negative growth.

While employment went up marginally during the period between 2008 and 2023, labour productivity declined by 1% noted Cefic.

In terms of spending, the chemicals industry across EU27 increased capex from €20 billion in 2013 to €32 billion in 2023.

China, meanwhile, increased its spending to €125 billion in 2023, up from €70 billion a decade before.

Rest of Asia also increased investment, more than doubling their spendings in chemicals industry to €42 billion in 2023.