The European Chemical Industry Council (Cefic) said on December 13th in Brussels that due to the increasing uncertainty in the global economic situation and the continued heavy reduction of inventory by producers, the growth rate of European chemical industry production in the next two years will be difficult to achieve. Giorgio Squinzi, president of the European Chemicals Council, suggested that the government introduce more measures to encourage investment and innovation, and that European chemical industry should stay ahead in the increasingly competitive global market.

The European Chemical Industry Council expects that European chemical production will increase by 2% this year from last year, well below the 4.5% expected in June of this year; next year's growth rate is expected to reach 1.5%, which is also lower than the previously estimated 1.8%. Continuing the trend of strong double-digit growth in chemical demand in 2010, chemical production growth this year basically occurred in the first quarter. Chemicals used in cosmetics, detergents and other fields are the star products of the European chemical industry in 2011, with production growth of 6.6%, and they will continue to lead in 2012. It is expected that production will increase by 2.5%. The growth rate of production of other chemicals is above and below average. After a long period of sluggish decline, the demand for construction chemicals is stable and will increase slightly in 2012.

Squez said that since the summer, the ongoing debt crisis in the euro zone and the high debt burden of the U.S. government have cast a shadow over global macroeconomics. This situation has forced companies to step up cash reserves and invest prudently. The sudden halt in the price of oil has stopped downstream users from choosing advance purchases. All of these increase the uncertainty of the future business environment, so that companies can accelerate the reduction of inventory. Therefore, the slowdown in chemical production growth is inevitable.

The growth of chemical production in the European Union was mainly driven by external demand and exports accounted for 1/3 of the total. In 2010, the EU’s chemical exports amounted to 140 billion euros, and the trade surplus reached 47 billion euros, reaching a record high after the first three quarters of 2011. The trade surplus has narrowed and is expected to be roughly stable in 2012. However, the export market risks still exist. The economic growth of most developed countries is still very slow. The fiscal austerity policy has caused political protests; while the developing economies in Asia are still growing, the asset bubble may be broken.

Squez said that from the global performance report released by companies in the third quarter of this year, the business of related companies achieved strong growth and had a good financial position. If the euro zone can finally issue an effective solution to the debt crisis and take reliable actions to stabilize the market and confidence, the European chemical industry will soon emerge from the current shadow and resume its upward trend in 2012.

However, he also warned that the chemical industry is highly globalized and the international competition is fierce. European chemical manufacturers continue to experience relatively high social costs as well as energy prices, and they also have to devote a lot of energy to deal with regulatory measures. The development of shale gas in the United States has attracted a new round of investment in the field of basic petrochemicals, and low-cost materials in the Middle East have also ensured the continued growth of production capacity. Therefore, to maintain the European chemical industry's leading position in the global market, the EU must have a visionary industrial policy, must focus on innovation, competition and sustainable development, encourage investment, and create more jobs.

“Although it is difficult for the government to encourage investment during this period of economic turmoil, I believe that it is very important to have a healthy life, economic stability and social progress. I therefore greatly appreciate the future common strategic framework proposed by the Commission. Frameworks, R&D and innovation projects will receive considerable funding. In addition, laboratory-to-market breakthroughs, including nanomaterials and other advanced materials, will require not only continuous financial support but also other incentives,” said Squez.

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