EU Chemicals Recovery Forges Ahead, Production Up 4.2 Per Cent in November

10.02.2011 -

EU chemicals production pushed further upwards in November, increasing 4.2% compared with November 2009, according to the latest Cefic Chemicals Trends Report. Production in the first eleven months of 2010 grew by 10.7% as compared with the same period in 2009, shooting above expectations of around 10%. December figures published later this month will likely be lower than November due to normal seasonal slowdown, causing the full-year 2010 production growth to settle back to the previously forecasted 10% level.

Despite double-digit growth rates for 2010, European chemicals production growth is less pronounced than that of world chemicals production, especially in Asia, which is experiencing significant expansion. The latest global chemicals production index was 8.8% higher as compared with December 2009, according to the American Chemistry Council.

The overall EU manufacturing sector has enjoyed a strong recovery since April 2009, with the level of production during the first eleven months of 2010 hitting 7.1% higher compared with the same period in 2009. Among manufacturing industries, the chemicals sector notched up the third-highest production rebound from January to November 2010, trailing only the automotive and basic metals categories.

Cefic Chief Economist Moncef Hadhri commented: "Last year's double-digit growth helped the chemicals sector clamber back out of the hole dug by the crisis. The EU chemicals sector hasn't reached pre-crisis levels yet, but a handful of countries, such as Belgium, have pulled themselves out. Growth will be positive, but at a slower clip in 2011."

Production up 20 %from December 2008
The November 2010 EU production index was about 20% higher than the bottom level reached in December 2008 and 4.2% higher than November on a year-on-year basis. Year-on-year production was up 10.7% for the first 11 months, mainly due to strong export growth and increased orders from other recovering EU manufacturing sectors.

Trade surplus up 9.5% in first ten months of 2010
The EU external trade surplus for chemicals improved during the first ten months of 2010 by 9.5% compared with the same period the previous year. The sector generated an extra-EU trade surplus of nearly €39.3 billion in the period from January to October 2010, up €3.4 billion compared with the same period in 2009. Specialty chemicals mainly contributed to the additional surplus, sectoral analysis reveals. External demand from non-EU Europe, Latin America, and emerging Asia primarily drove the EU trade surplus spike during the first ten months of 2010.

Chemicals sales up 17.5% in first ten months of 2010
Chemicals sales in October 2010 were 11.3 %higher on a year-on-year basis. Exports drove sales during the first ten months of 2010, with total sales up 17.5 % compared to the same period in 2009.

World chemicals sector surpasses 2007 peak
Global chemicals production data show the industry is experiencing a robust recovery. The overall global chemicals production index has grown 23.5% since bottoming out in March 2009. Despite a strong 8.8% year-on-year performance for December 2010, growth in emerging markets, such as Asia, who lead the global recovery, will be slower than in 2010. A dead-cat bounce is not foreseen for the index.

EU industry stays on recovery path
EU industry since April 2009 has kept on its recovery path, with the production level for the first eleven months of 2010 reaching a 7.1% growth rate on a year-on-year basis. EU industry felt different impacts from the crisis, as the biggest production increases from January to November 2010 derived from automotive, 20.9%; basic metals, 19.1%; and chemicals 10.7%. Construction, a key chemicals industry customer, fell 3.8%.

The EU Economic Sentiment Indicator stands well above its long-term average

The Business and Consumer Survey (BCS) reported that the January 2011 Economic Sentiment Indicator (ESI) was 105.8 in the European Union, remaining broadly unchanged. After seven months of uninterrupted improvement, the indicator stands well above its long term average. Sentiment in industry continued to contribute positively to the overall results.

Confidence among consumers declined slightly in the European Union and remained stable in the euro area. The indicator stands at very low levels, but sentiment in construction remained broadly stable in the EU. Retail sector sentiment weakened substantially in both the European Union and the euro area, after a significant gain in December 2010. The quarterly manufacturing survey indicates a continuous upwards trend in capacity utilisation, now standing at about 80%in both the EU-27 and the euro area, and approaching its long-term average of 81%. Industry managers signalled a significant increase in their selling price expectations.