EU chemical production in the first half of the year fell 5.2% year-on-year

According to the new quarterly report of the European Chemical Industry Association (Cefic), EU chemical production fell by 5.2% year-on-year in the first half of 2020, a steeper decline than that of global chemicals, and the global decline was 3.4% year-on-year.

According to the report, as of the end of June, production prices in the 27 EU countries fell 4.8% from the first half of 2019, and total sales of chemicals in the region and exports in the first five months of this year fell 7.9% year-on-year to 202.2 billion euros. According to the report, weak domestic demand in Europe, coupled with the impact of the epidemic, the deterioration of the business environment, has had a negative impact on sales. In the first half of the year, the utilization rate of chemical production capacity in the 27 EU countries was about 9% lower than the equivalent figure in 2019.

Cefic said that compared with other countries, the production of chemicals in France and Italy has been more affected by the crisis. The production of chemical products in France and Italy fell by at least 12% in the first half of 2020 compared with the same period of the previous year, followed by Spain and Portugal, which fell by more than 6.5%. Chemical production in Belgium and the Netherlands fell by about 6% over the same period, Germany fell by 3.6%, while Poland's production fell by 1.7%, and the United Kingdom fell by 6.2% year-on-year.

Some EU chemical industries that provided services to important supply chains during the epidemic did indeed achieve growth during this period. Among them, soap and detergents reported a 2.9% increase in production in the first six months of 2020 compared to last year.

The report shows that in the first five months of 2020, the export value of chemicals outside the EU 27 countries decreased by 2.7 billion euros from the same period last year to 72.4 billion euros, a decrease of 3.7%. The export of petrochemical products from the 27 EU countries to the United States increased by 2.3 billion euros, an increase of 8.8%. However, this was offset by a sharp drop in exports of specialty chemicals and consumer chemicals from the 27 EU countries to the United States during the same period. The total export volume of chemicals from the 27 EU countries to China was 6.3 billion Euros, a year-on-year increase of 1.2%. The report added that the data in April and May showed that exports of chemicals from EU-27 countries fell twice in a row, and "no obvious signs of export recovery were seen."

In the first five months of 2020, the EU-27’s imports of chemicals from outside the region fell by 800 million euros year-on-year to 56.2 billion euros, a decrease of 1.4%. Among consumer products, imports of polymers fell by 4 billion euros. However, during the same period, imports of specialty chemicals and petrochemical products in the 27 EU countries increased significantly. The imports of chemical products from China by the 27 EU countries increased by 0.6% year-on-year to 6.5 billion euros.

Cefic said that the chemical production data of the 27 EU countries showed "signs of a fragile recovery." According to the report, data in June showed that output increased by 2.9% compared with the previous month, but compared with February this year, it was still about 9% lower than the level before the epidemic.

After the outbreak of the epidemic, small and medium enterprises engaged in the chemical business still face liquidity problems. Many small and medium-sized enterprises are family-owned enterprises, usually without a big backing. They will continue to face customer delays in payment in the near future, but it is too early to fully measure these effects.

According to Cefic's report, global chemical product production in the first half of 2020 decreased by 3.4% year-on-year, reflecting the weak trend of key customer industries, which led to a slowdown in chemical growth in all countries. In terms of chemical production, India and Japan were even more affected, falling by 14.1% and 9.2%, respectively. The output of chemical products in the United States and the 27 EU countries fell by about 5% year-on-year, while the output of chemical products in China fell by 2.1% year-on-year. "China is still an exception; production has gone through a V-shape, and the output level in July is the highest ever." The report said.

The EU chemical industry has been severely hit by the current economic recession, but Cefic Director General Marco Mensink said that Cefic is encouraged by the mild signs of recovery in European chemical production. The impact of the epidemic on different sectors of the chemical industry varies. The overall decline in cross-sectoral manufacturing activities, including automobiles and oil refining, may affect the pace of some investments.

"This makes it more critical and timely to establish a coordinated policy framework to support European investment in these technologies. Cefic calls for the development of a'sectoral green agreement' to promote greater policy consistency," Mensink said. With the'right policy framework', the EU's recovery package may become an opportunity to prioritize investment in innovative green trading solutions such as electronic cracking furnaces, chemical recovery, hydrogen, carbon capture and storage (CCS) and carbon capture And utilization (CCU) infrastructure and other new technologies."