EU chemical industry: Good prospects for 2006 with modest slowdown for 2007


According to its spring "Economic Outlook", Cefic, the European Chemical Industry Council, expects output in the chemical industry (excluding pharmaceuticals) to grow by 2.6% in 2006, compared to 2.4% in 2005. The year 2007 may show a modest slowdown, possibly reaching growth of 2.2%.

The European chemical industry started the year 2006 on a positive trend. During the 1st quarter, positive developments of the preceding year continued: output and industry sales rose against the previous months and were clearly above the level of the previous year.

Against this background, the economic climate in the chemical industry has been improving in recent months. European chemical companies are also optimistic about the near future. Conditions are good to make 2006 a successful year for the chemical industry. The economy is growing in most markets of importance to the European chemicals business. In Europe, domestic business will pick up due to an expected upturn of investments. Private consumption will improve gradually too. In view of further expected production increases in many downstream industries, the demand for chemicals should continue to rise. Therefore, in 2006 domestic demand for chemicals in Europe could become a key motor of the chemical industry's business activities.

However, many industry experts are anxious about high oil prices and the weak US dollar. The former mean an immense cost burden for chemical companies, whilst the latter constitutes a strain on export activities of European chemical enterprises and industrial customers. Irrespective of these dampening factors, Cefic expects an output growth of 3.6% in 2006 for the industry as a whole (including pharmaceuticals). Basic chemicals will continue to show robust growth. But, after having performed rather badly in 2005, specialty & fine chemicals activity and pharmaceuticals will now be the major engine of growth.

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