European Chemical Companies Experience Decline in Demand in Q2

According to reports, several European companies have reported a decline in chemical demand in the second quarter of this year, with no signs of improvement in sight.

BASF is among the companies feeling the impact of the weak market. The German giant's preliminary financial results show that its sales in the second quarter will drop by 25% compared to the same period last year, to $18.9 billion. The company expects its corresponding pre-tax profit, excluding special items, to drop by 57% to $1.1 billion. The company has significantly lowered its expectations for full-year sales and pre-tax profit.

German specialty chemicals company Evonik Industries has also revised down its expectations for 2023 and said in a press release that "no recovery is expected for the second half of this year". The company's pre-tax profit for the second quarter fell by about 40% compared to the same period last year, with sales dropping by 16% to around $4.4 billion. The company plans to reduce costs and cut capital expenditures.

Berenberg Bank chemical stock analyst Sebastian Bray said in a financial report that Evonik and its peers are facing headwinds across the entire chemical industry.

Another company that has lowered its 2023 expectations is Clariant. CEO Conrad Keijzer said in a press release, "The uncertainties and risks in the economic environment, including the speed of China's economic recovery, which we highlighted at the beginning of this year, unfortunately, have now become a reality and are putting pressure on the entire industry." The positive aspect is that the Swiss company's catalyst business has "a large volume of orders".

Clariant has announced its preliminary financial results for the second quarter, expecting pre-tax profit to decline by about 25% to between $139 million and $148 million. Sales are expected to drop by about 17% to $970 million.

Shell has also announced its preliminary results for the second quarter. Despite an increase in profit margins, the UK company expects its chemical business to report a financial loss.