EU chemicals output expected to stabilise in 2020 due to slowing global economy and decline in manufacturing industry growth

Chemical industry output January-September 2019 was 0.7% below the 2018 level

Cefic, the European Chemical Industry Council, expects chemical production in the European Union to have declined by 1% in 2019 compared to 2018. For 2020, chemical production is expected to stay on the same level as 2019.

The chemicals business climate has been affected this year by slower global economic growth, political uncertainty around Brexit and ongoing trade conflicts. Demand for chemicals was also lower this year than in 2018 as several key chemical buyer industries (automotive, electrical appliances) significantly reduced their output in 2019.

On the positive side, the construction industry, another key buyer of chemicals, has posted stable growth of 2.5%. The construction sector benefits from low interest rates and high demand in infrastructure investments, so its growth is expected to continue in 2020. Since the chemical industry provides many solutions and technologies for infrastructure and energy efficient building, demand for chemicals in this sector is set to grow.

René van Sloten, Cefic Executive Director Industrial Policy: “Despite slightly weaker growth forecasts, Europe remains the second largest chemicals producer in the world. Our competitive advantage and future growth could come from specialised, higher-value-added products and solutions for a climate neutral and circular economy if we have the right EU policy framework and sufficient support for innovative chemistry in place”.

The 2020 outlook is expected to remain in line with 2019 figures. While rising real incomes should keep demand in manufactured goods stable, the continuous political uncertainty and hostile trade environment are unlikely to promote significant growth.