European Chemical Industry Faces Challenges as Cefic Predicts 8% Production Decrease in 2023

Recently, the European Chemical Industry Council (Cefic) announced that it expects chemical production in the 27 EU countries to decrease by about 8% from the previous year in 2023. Cefic stated that this year's performance has been weak and that demand for European chemicals will not immediately recover. Cefic called on the European Commission to create conditions to attract investment and support the transformation of the EU chemical industry.

Cefic Secretary General Marco Mensink said, "The EU chemical industry is facing a perfect storm. The combination of high energy prices, weak global demand, and the US Inflation Reduction Act means that there is simply no business case for investing in Europe right now. The EU Green Deal requires investment in Europe. We urgently call on European leaders to make private sector investment in the transformation of European industry a top priority in the next legislative period."

According to Cefic, after a production decline in the fourth quarter of 2022, demand did not show strong recovery in the first four months of 2023. Cefic's data showed that chemical production in the first quarter of 2023 decreased by 13.5% compared to the same period last year, and the capacity utilization level in the first quarter of 2023 was similar to that during the first COVID-19 lockdown period in 2020, at about 75% of normal levels.

Cefic stated that due to continued weak internal and export demand, chemical inventories need to be further reduced, and customer demand also showed negative trends. Chemical industry indicators in Europe still indicate that new orders will further decline. "Looking further ahead, it is expected that there will be new stimuli for chemical demand as inflation subsides, real incomes positively impact inventory cycles and consumer demand recovers. However, any prospects are currently very uncertain," Cefic said.

Cefic also urged the European Commission to address the many challenges facing the EU chemical industry and create favorable conditions for private investment to support the transformation of European industry. Cefic said, "As we transition to climate neutrality, circular economy, digitization, and safe and sustainable chemicals by 2050, the chemical industry's transition is the biggest challenge in our history. At this moment, the EU industry is also facing an unfavorable investment environment and high energy prices."

Cefic emphasized the importance of the chemical industry's commitment to support the EU Green Deal and the legislative environment that promotes the industry's transition to 2050. Cefic called on the European Commission to prioritize the development of abundant renewable energy and raw materials, including reliable energy, cross-border grid expansion, and partnerships with resource-rich countries. Cefic also urged the European Commission to expand the scale of renewable carbon and circular carbon raw materials, including expanding existing technologies such as chemical recycling, and to develop a comprehensive circular carbon strategy to incentivize carbon capture and utilization and the use of biomass raw materials. Cefic's declaration also stated that the EU should prioritize making European industrial investment attractive.