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EU chemical production shows signs of recovery, COVID-19 second wave threatens another slowdown

November 30/2020

MOSCOW (MRC) -- Production of chemicals in the EU showed signs of recovery in the third quarter of 2020 with a significant sequential increase of 6.1% compared with an 8.7% sequential decline in the second quarter, according to Chemweek with reference to Cefics latest quarterly report.

In the first nine months of the year, EU chemical production dropped 4.4% year on year (YOY), due mainly to the COVID-19 outbreak in Europe, the report says. Overall EU manufacturing output fell sharply, by 10.6% YOY, with automotive output losing more than 28%, Cefic says.

EU chemical producer prices were down 5.0% YOY with total industry sales of EUR318.2 billion (USD379.2 billion) in the first eight months of 2020, 9.0% down YOY, attributed to the weak domestic demand in Europe and the deterioration of trade business environment, Cefic says. EU chemical exports outside the EU reached EUR111.7 billion in the first eight months of the year, down 5.5% YOY, and chemical imports from outside the EU were down 3.9% YOY in the same period, to EUR86.4 billion.

Cefic notes that the recovery that started in May is showing signs of slowing as a result of the second wave of COVID-19 in European countries. It adds that the length and severity of the second wave will impact chemical production levels in the EU.

This underpins the need for rapid approval and implementation of the EU Economic Recovery Plan, (which) needs to be firmly embedded in the EU Industrial Strategy and the Green Deal agenda. Only this will ensure that the recovery funding achieves an industrial transformation that will be sustainable and contributes to a resilient economy over time, says Marco Mensink, director general at Cefic.

France and Italy were the EU countries with the biggest decreases in chemical output in the first three quarters of 2020, each down at least 10% YOY, followed by Spain, Belgium, and Portugal, according to Cefic. Poland was the least affected country, registering unchanged YOY output, and Germany and the UK saw production decline 3.6% and 1.7%, respectively, Cefic says. Capacity utilization in the EU is still 7.7 percentage points below the previous years level, it says.

Worldwide production of chemicals in the same period declined 1.8% YOY, with China the only big producer of chemicals posting an increase in output in the first nine months, 0.7% YOY. Cefic notes that Chinas output has already experienced the V-shape and the production level in September was the highest one ever. Low demand from key customer sectors worldwide slowed down the growth of chemical production in all other countries, with India and Japan posting the steepest declines in output, 10.4% and 9.4%, respectively, according to Cefic data.  

Cefic adds that the latest business survey data in the EU Chemicals Confidence Indicator show improvement for the sixth consecutive month in October, following a historic slump in March and April. Chemical production expectations for the months ahead registered a small decrease in October, the survey shows.

The Economic Sentiment Indicator in the EU remained unchanged sequentially, and consumer confidence slipped 1.6% with households reporting growing concerns about the expected general economic situation, Cefic says.

As MRC reported earlier, in mid-July, 2020, Cefic called on EU member states to agree urgently on a recovery plan to restart Europes economy and kick off investments toward a green and digital transition. The EU chemical industry is seeking investments in building renovation, clean mobility, the development of all forms of clean hydrogen, chemical recycling, and carbon capture and storage as well as carbon capture and utilization, Cefic said then.

We remind that in 2017, SIBUR joined the European Chemical Industry Council (CEFIC). SIBUR has also become a member of the European Committee of Ethylene Producers and Technology Suppliers (EEPC, part of CEFIC). Membership in the Council allowed SIBUR to take part in the work of 93 sectoral groups on more than 120 petrochemical products, in 90 strategic groups working on issues of sustainable development, innovation, trade, energy and law in the field of petrochemicals.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
Author:Margaret Volkova
Tags:Europe, PP, PE, PP random copolymer, propylene, HDPE, ethylene, petrochemistry, Sibur Holding, Germany, India, China, Poland, Russia.
Category:General News
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