Modest recovery for chemicals
25 Jan 2005
A 'moderate recovery' is in store for the European Union's chemical industry, according to the European Chemical Industry Council, CEFIC. Excluding pharmaceuticals, chemical output should grow by 2.4% in 2004, and 2.6% in 2005, it says.
Although the projected growth is not huge, it far outstrips growth for the past three years, CEFIC says. As European industrial activity as a whole picks up, the growth of the chemicals sector will strengthen further.
Recoveries are expected in almost all chemicals sectors, CEFIC says, with pharmaceuticals, petrochemicals, and plastics and synthetic rubber performing particularly strongly. However, growth rates will fall back slightly in consumer chemicals, speciality and fine chemicals, and basic organics.
There are, however, several adverse risks. The weakness of the US dollar may affect the buoyancy of external EU trade, CEFIC says. There are also concerns over the sensitivity of the oil price to the political situation in the Middle East.
In 2004, the escalating oil price was offset by exceptional demand growth for chemical products in Asia, especially China, and the limited availability of spare production capacity. However, oil prices will remain highly sensitive to any underlying disruption to the markets, and for 2005, the balance of risks around prices remains firmly on the upside.
Shell Chemicals' strategy and project manager for lower olefins, Arie Hoogenboom, believes that the outlook for global chemical sales is bright.
'Chemical sales could grow some 60%, from $1.5 trillion to $2.4 trillion' from the mid-1990s to 2010, he told a conference in Antwerp last month. 'Global ethylene demand is growing much faster than demand for oil and gas and ahead of average GDP growth,' he added.
