EU Chemical Production on the Downward Slope

The EU chemical production faces significant decline. According to a CEFIC press release these dismal prospects apply to nearly all segments of the chemical business, while consumer chemicals are more resilient. 

This economic outlook follows a weak start to the year. The first 4 months of 2023 have not delivered a strong recovery after the slump of production in Q4 2022, the industry body states in its communiqué. In the first quarter (Q1) of 2023, production volume already declined by 13.5% in comparison to the previous year.

The capacity utilization levels of Q1 2023 show low levels similar to the ones seen during the first Covid lockdown in 2020. In Q1, capacity utilization levels were around 75%, well below the long-term average level of 81.6%. For comparison only, in the US, capacity utilization of chemical manufacturing facilities are at levels of around 80% and have been above 78% for nine quarters in a row.

Demand from customers also showed a negative trend: domestic and export demand remained very weak and chemicals inventories needed to be reduced even further. Indicators for the European chemical industry still point to a further decline in incoming orders.

Commenting on the outlook, Marco Mensink, CEFIC Director General, said: “The EU chemical industry is facing a perfect storm. The combination of high energy prices, lack of global demand and the US IRA means there is simply no business case for investing in Europe now. The Green Deal needs a business case in Europe. We urgently call on European leaders to make private sector investments in Europe’s industrial transformation the main priority during the next legislative cycle.”