Cefic: EU chemical production expected to drop 8% this year

EU27 chemical production is expected to decline by about 8% in 2023 compared to the previous year, with no imminent recovery of chemical demand in Europe, according to Cefic, the European Chemical Industry Council.

This outlook applies to nearly all segments of the business, while consumer chemicals are more resilient. It follows a weak start to the year. The first 4 months of 2023 did not deliver a strong recovery after the slump of production in Q4 2022.

The EU chemical industry is facing a perfect storm.

Capacity utilization below normal levels

In Q1 2023, production volume declined by 13.5% in comparison to the previous year. The capacity utilization levels of Q1 2023 showed levels similar to the ones seen during the first COVID-19 lockdown in 2020, says Cefic.

In Q1, capacity utilization levels were around 75% of normal levels. Demand from customers also showed a negative trend, domestic and export demand remained very weak and chemicals inventories needed to be reduced even further. Indicators for the European chemical industry still point to a further decline in incoming orders.

A perfect storm ahead

Commenting on the outlook, Marco Mensink, Cefic Director General, said: “The EU chemical industry is facing a perfect storm. The combination of high energy prices, lack of global demand and the US IRA (Inflation Reduction Act) means there is simply no business case for investing in Europe now.”

He added: “The Green Deal needs a business case in Europe. We urgently call on European leaders to make private sector investments in Europe’s industrial transformation the main priority during the next legislative cycle.”