EU Chemical Production may Resume Growth in 2024

Recently, the European Chemical Industry Council (Cefic) predicted that EU chemicals production may increase by 1.0% in 2024. Cefic described the outlook as "flat to modest growth" and would represent a modest recovery from a challenging two years for the European chemicals industry.

Cefic said that the reasons for the decline in chemical production in Europe in recent years are well known: energy prices have soared and demand for commodities has dropped sharply after the COVID-19 epidemic. Cefic said that in addition to the automotive industry, other EU consumer goods industries also face a slowdown in 2023. Inflation, declining purchasing power and Europe's "complex and expensive regulatory agenda" are also factors in the industry slowdown, the report said.

Regarding the current situation, Cefic Director General Marco Mensink said, the current lack of demand is affecting the chemical industry around the world. After the disruption of value chains and the impact of inflation have been absorbed in global markets, there are now the first signs of recovery. However, energy costs remain the Achilles heel of the European chemical industry. Coupled with high raw material costs, the European chemical industry is losing its competitive advantage in the global chemical market. Elsewhere, companies are looking to reinvest, particularly in the United States and the Gulf, while investment in Europe is under intense pressure. Meanwhile, the effects of the U.S. Inflation Reduction Act are only beginning to be felt around the world.

Cefic predicts that in 2024, the demand structure of the chemical industry will gradually normalize, and purchasing power is expected to increase, coupled with falling inflation rates and rising wages, it is expected to boost private demand. However, growth expectations for 2024 remain limited. Cefic said: "Rising interest rates will also continue to suppress demand in the construction industry, and the automotive industry is not expected to grow faster than 2023 levels. Therefore, the overall economic outlook for the EU chemical industry remains uncertain."