CBA reports slight improvements but background concerns for chemical sector

Tim Doggett (pictured), chief executive officer of the Chemical Business Association (CBA), acknowledged some encouraging results from the organisation’s latest quarterly supply chain survey. 

But he insisted that, overall, the Q3 figures remained of “great concern”. 

“While there are signs of improvement in order books and sales, many businesses continue to face mounting pressures,” stated Doggett.

He warned that factors such as the continued lack of clarity surrounding UK REACH “continue to stifle growth and drive business overseas”.

Meanwhile rising costs, including high energy prices and increased employers’ National Insurance Contributions, were squeezing already tight margins, he warned. 

“The chemical industry employs over 150,000 people directly, with at least half a million more in the chemical supply chain, and the growing expectation of job cuts is particularly concerning. It reflects just how acute these pressures have become,” added Doggett.

The survey, based on responses from manufacturers, distributors, transport, logistics and service providers across the UK’s chemical supply chain contained some encouraging figures.

Nearly one in three (30%) respondents reported improved order books, up from 18% in the same quarter last year. More than a third (36%) reported higher sales over the past three months – nearly doubling the quarterly figure of 20% in 2024 (20%).

Furthermore, in the short term, almost a quarter (24%) of companies expected sales to rise. 

However, in other areas, responses appeared gloomy: 

• Sales margins – barely one in 10 (11%) said they had seen improvements and 55% saw no change. Also 37% expect margins to worsen in the next quarter.

• Employment – headcount has remained but the number anticipating reductions has risen from 20% last quarter to 28%.

• Logistics costs – half of respondents reported rising shipping costs, but this is an appreciable drop from the 77% in Q2. Road haulage capacity issues in the UK nearly doubled to 11% and for the EU multiplied five times to 15%.

At the geopolitical level, the perceived negative effects of the Red Sea/Suez shipping route dispute dropped from 57% to 33% between Q3 and Q2. But the impact of the Ukraine-Russia conflict grew, with 27% of respondents saying it had impacted, compared with 16% for the same period last year.