((CHEManager Europe 7-8/2013))    Economic uncertainty continues
Large parts of Europe continue to be in recession. The economic performance of the European Union (EU) has declined for six successive quarters. However, it seems that the bottom of the trough has been reached. The downward trend seems to have stopped; Germany is already experiencing an upward trend. However, the economic turnaround is delayed further. There is yet no evidence of recovery in the chemistry sector. So far order book entries do not show an increase in demand. But, the situation will stabilize in the second half of the year. Modest growth could then be expected in the following year (Fig. 1).

Chemical production remains sluggish
The rapid recovery that followed the bitter setbacks around the end of 2008/beginning of 2009 only lasted until the first quarter of 2010. Then the debt crisis and the related uncertainty in the markets hit the European chemical industry. Production went down quarter over quarter. At the beginning of 2012 the downtrend stopped. However, European chemical production did not recover in the period that followed, nor did the first quarter of 2013 bring about the hoped-for economic turnaround (Fig. 2). European chemical production is currently at pre-crisis level, with a capacity utilization rate of 79.4%.

Moderate price increases
Up until the summer of 2011 chemical prices increased dynamically. Then orders declined and commodity prices remained almost stagnant. However, since they remained on a high level and the weak Euro created additional cost pressure, companies were forced to further increase their prices. Since summer 2011, though, the upward trend of prices for chemicals leveled off significantly, but continued into the first quarter of 2013 (Fig. 3). Year to date, chemicals have been, on average, around 1% more expensive than a year ago. As expected, the commodities-related sectors saw the biggest price increases.

Exports trigger momentum
Since 2011, given the weak markets in Southern Europe sales volumes have been declining throughout the industry. The downtrend continued into the beginning of 2013. Despite higher prices, the previous year's level was missed by almost 2% (Fig. 4). Although the industrial production stabilized slightly at the beginning of the year, customers have been cautious about placing orders for chemicals. Only foreign business triggered some momentum; exports have increased by 2.8% between January and April. All in all, however, exports could not offset the weak domestic business.