Trade Development

EU27 chemicals trade surplus reaches a high level

Extra-EU27 chemicals trade balance

Trading chemicals around the world stimulates competition, provides incentive to develop new markets through innovation and stimulates production efficiency. Above all, it helps to improve the quality of human life.

A historically important player in the global chemical market, the EU27 chemical industry continues to benefit from trade opportunities. Both chemical exports and imports recorded an increase in 2019 compared to 2018.

This analysis shows that in 2019, imports grew faster than exports. Compared to 2018, the EU27 chemicals trade surplus with the rest of the world fell slightly by 0.2% in 2019 and reached €45.2 billion.

Open competition and open markets would help generate more trade and benefits for all partners and citizens. Trade agreements with key partners will enable our industry to enhance efficiency and better use our technical strengths.

EU27 records trade surplus for most chemicals sectors

Extra-EU27 chemicals trade flows by sector

EU27 chemical industry exports reached €177.5 billion in 2019. Specialty chemicals is the largest exporting sector, accounting for one third of total EU chemical exports in 2018. Petrochemicals was the second largest exporting sector, contributing 23% of total EU27 chemical exports, followed by consumer chemicals and polymers (18% each). With 7%, basic inorganics was the smallest exporting sector.

EU chemical imports from the non-EU27 area reached €132.4 billion in 2019. Petrochemicals was the largest chemicals importer in 2019 (35%), followed by specialty chemicals and polymers, contributing 26% and 19% respectively. Basic inorganics accounted for 11% of total imports and, with 8%, consumer chemicals were the smallest importing sector.

The EU chemical sector generated a trade surplus of €45.2 billion in 2019. Trade analysis indicates that the EU27 chemical sector recorded a trade surplus in 2019 for specialty chemicals, consumer chemicals, polymers and petrochemicals; however, basic inorganics experienced a trade deficit in the same year.

The chemical industry depends on free trade and open markets, both for its raw materials and as outlets for its products. The industry relies increasingly on tightly interconnected clusters that participate in global value chains.

Top 10 EU27 partners account for 69% of EU27 chemicals trade

EU27 chemicals trade* flows with top partners

Extra-EU27 chemicals trade flow, calculated as total exports plus imports, was valued at nearly €309.9 billion in 2019. The top 10 EU27 partners accounted for 69.2% of extra-EU27 chemicals trade in the same year.

The US was again the EU27’s biggest trading partner for chemicals in 2019. It bought €29.9 billion of EU27 exports, whilst accounting €23.2 billion of EU27 imports. It was responsible for 17.1% of total EU27 chemicals trade in 2019. Transatlantic trade flows are expected to change considerably in the next five years because the US shale gas boom has triggered a massive build-up of new US chemicals production capacity.

The UK was the EU27’s second largest trading partner in chemicals in 2019. It bought €24.4 billion of EU27 exports, whilst accounting for €20.9 billion of EU27 imports. It contributed 14.6% of total EU27 chemicals trade in 2019.

China is the EU27’s third largest chemicals trading partner, accounting for 9.3% of EU27 chemicals trade. China has become the most important growth market for global chemical companies and a major investment location. While Chinese chemical companies are gradually increasing their focus on specialty chemicals, the country will remain a major importer of commodity chemicals for some time to come. Chinese expansion does not necessarily imply Europe loses out; rather, there are wins for both, and China offers many opportunities.

EU27 holds trade surplus with top competing markets

EU27 chemicals trade flows with major geographic blocs

A look at the 2019 EU chemicals trade balance with key countries and regions shows:

  • Apart from China and Japan, the European Union has a trade surplus with all main trading regions – NAFTA, Latin America, Africa, and rest of Europe. The two major geographic blocs trading with the European Union in 2019 remained the rest of Europe and North America.
  • The EU 27 generated its largest chemicals trade surplus with the rest of Europe, which covers UK, Turkey, Switzerland, Russia, Norway and Ukraine. The EU27 surplus with the rest of Europe amounted to €13.8 billion in 2019, to which specialty chemicals and consumer chemicals contributed significantly.
  • The EU27 generated a chemicals trade surplus of €6.7 billion with the United States. Petrochemicals contributed to 2/3 of the total EU27 chemicals surplus with the USA. This sector is sensitive to US shale gas development. The USA is the world’s biggest producer of bioethanol, making around 54% of world production in 2013.
  • The EU had a chemicals trade deficit with India, mainly reflecting the deficit that occurred in petrochemicals (€1.8 billion). India is the world’s second largest emerging market, and the EU27 is playing a key role in this transformation as India’s greatest source of foreign direct investment.
  • The EU had a chemicals trade deficit with Japan, mainly due to the deficit occurring in polymers (€1.0 billion) and specialty chemicals (€0.9 billion). The EU27 also had a chemicals trade deficit with South Korea, due to the deficit that appeared in polymers (€2.4 billion).

Specialty and consumer chemicals contribute most to EU27 chemicals trade surplus

Extra-EU27 chemicals trade balance

The EU27 chemicals trade surplus in 2019 reached €45.2 billion. 54% of it can be attributed to specialty chemicals. Specialty chemicals generated the largest EU27 trade surplus compared to the other chemical sectors. Consumer chemicals have the second strongest external trade performance, followed by polymers.

Petrochemicals continued to register a trade deficit of €5.1 billion in 2019 after trade deficits were recorded both in 2017 and 2018. Basic inorganics experienced a trade deficit of €1.5 billion in 2019.

The EU27+ UK is the largest chemicals exporting region in the world

World network of major chemicals exports flows

This brief overview of world chemicals trade flows uses a trade matrix, where the world is divided into 10 geographical regions: the EU, the USA, China, Middle East, Japan, rest of Europe, rest of Asia, Latin America, Africa and Oceania. Countries of “rest of Europe” are mainly Switzerland, Russia, Norway, Turkey and Ukraine. The main countries in “rest of Asia” are South Korea, India and other emerging countries in Asia (China, Japan and Middle East are excluded).

Trade Matrix: The matrix has been put together from export data in the chemical sector (Nace 20). Exporting regions are presented in rows and importing regions are presented in columns. The intercept of row ‘i” and column “j” means exports from region “i” to region “j”. The main diagonal of the matrix (shaded cells) represents intra-region trade (e.g. exports from EU27 +UK countries to EU27 +UK countries). For the purpose of trade performance analysis, intra- EU27 +UK trade flows are excluded from the present section.

Intra-Trade: It is commonly known that trade between neighbouring regions is significant (e.g. intra- EU27 +UK trade); it reflects factors such as distance between trading partners, transport costs, and the existence of common borders. Proximity of the markets is a key factor stimulating intra-trade. Our trade analysis (including intra-trade) shows that chemicals trade within the EU27 +UK internal market is significant, since 27% of total world chemicals trade takes place between EU27 +UK countries in 2018 (intra- EU27 +UK /world trade).

Compared to the other trading regions, the EU27 +UK is also the largest chemicals exporting region in the world, accounting for 40% of world chemicals exports. EU27 +UK intra-trade is by far the largest intra-regional trade in the world.

The analysis of the chemicals export flows between the main regions shows the following results:

  • The EU27 +UK is the largest chemicals exporting region in the world: EU27 +UK chemicals exports to the rest of the world (intra-EU trade excluded) amounted to €157.1 billion in 2018. The EU area accounts for about 21% of world chemicals exports. China is the fourth largest destination for EU27 +UK chemicals exports. The top four largest chemicals exporting regions in the world are the EU27 +UK, rest of Asia*, the USA and China.
  • The EU27 +UK is the third largest chemicals importing region in the world: EU27 +UK chemicals imports from the rest of the world excluding intra- EU27 +UK imports were valued at €108.6 billion in 2018. The EU27 +UK area contributed 14.2% of world chemicals imports. The four main import origin markets of the EU27 +UK area are the USA, rest of Europe, rest of Asia* and China.

The EU27 + UK area is the largest destination market for US chemicals exports

World network of major chemicals exports flows

The summary results of the top five chemicals export markets for the 10 geographical regions selected in the previous table are (data 2018):

  • The EU27 +UK area is the largest destination market for US exports: 18.5% of US chemicals exports are sold in the EU27 +UK chemicals market. Rest of Asia (Japan, China and Middle East excluded) and Latin America are respectively the second and third largest exporting markets for the US chemical sector. China is the fourth largest destination for US chemicals exports, accounting for 8.5% of total. The USA contributes 17.6% of world chemicals exports.
  • The EU27 +UK area is the second largest destination for Chinese exports: Trade between China and its neighbours is very significant. As might be expected, the rest of Asia* market is by far the largest destination for Chinese chemical exports (46%). The EU27 +UK market area is the second largest destination for Chinese chemicals exports. 13.7% of Chinese chemicals exports are sold in the EU27 +UK area, meaning the EU27 +UK chemical market is the most important market for China after the Asian market. The USA is the third main destination for Chinese chemicals exports, accounting for about 11% of total exports of China. China accounts for 14% of world chemicals exports.

The EU27 + UK has by far the largest chemicals surplus in the world

World matrix: chemicals trade balance

Following is a brief analysis of the chemicals trade balance using the trade matrix (data 2017). The chemicals trade balance is calculated for each region as total exports minus imports. Intra trade is of course excluded.

A look at the chemicals trade performance of each region shows the following:

  • The EU27 + UK area has by far the largest chemicals surplus in the world: The top five largest chemicals surpluses are generated for the EU27 + UK by trading with rest of Asia, rest of Europe, Africa, the USA, and Latin America. Trading with China is generating a small surplus for the (EU27+UK) area. The (EU27 + UK) area has by far the largest chemicals surplus in the world, followed by the USA.
  • The US chemical sector generates the second largest trade surplus in the world: Comparing the total chemicals trade balance for all regions, the analysis shows that five regions generated a chemicals surplus with the world in 2017: the EU27 + UK, the USA, Japan and Middle East and rest of Europe. These regions performed well, since they have generated a net exports value (export value higher than import value).
  • The “rest of Asia” has by far the largest chemicals deficit in the world: The analysis reveals that five regions have a trade deficit (export value lower than import value): rest of Asia, Latin America, Africa, China and Oceania. The largest trade deficits are generated by rest of Asia.

Growing EU27 + UK chemicals exports

EU27 chemicals exports to world

A look at EU27 +UK EU28 chemicals exports (intra- EU27 + UK trade excluded) during the years 2008-2018 shows the following results:

  • World exports grew 5.5% per annum from 2008 to 2018. World exports amounted to €863.1 billion in 2018, up from €506.5 billion in 2005.
  • EU chemicals exports grew 3.7% per annum on average. Exports reported a significant increase from €109.6 billion in 2008 to €157.1 billion in 2018. Exports in value terms rose significantly; at 43% higher in 2018 compared to 2004.
  • EU export values show a positive and encouraging trend; however, the EU’s world exports market share decreased from 21.6% in 2008 to about 18.2% in 2018. The decline in EU27 +UK exports competitiveness is in line with the falling EU27 +UK sales market share.

Decreasing share of chemicals exports for the EU27 + UK, USA and Japan

Chemicals exports by country of origin

World exports reached the value of €863.1 billion in 2018, up by 70% from €506.5 billion ten years ago (intra- EU27 +UK trade excluded).

  • Europe is not the only region losing its export share; other industrial regions are experiencing similar effects. The US export market share went down from 18.3% in 2008 to 15.6% in 2018, while Japan’s export market share declined from 8.4% to 7.0% during the same period of comparison.
  • Emerging countries such as China, South Korea, Saudi Arabia and India have benefited more than industrial countries. Export values have increased substantially in China (2.6 times bigger in value in 2018 compared to 10 years ago), in Saudi Arabia (3.1 times higher), and India (2.9 times higher during the same period). The export market share of China went up from 8.9% in 2008 to 13.4% in 2018.