VINACHEM

Chemicals production in the EU has continued to firm through 2024, but weak demand is keeping output growth below recovery levels, with energy prices still substantially above US levels in the region, trade body Cefic said.

Sector output increased for the fourth consecutive quarter in the April-June period, increasing 1.2% compared to the first three months of the year and 4.3% from the same period in 2023.

The second quarter last year may stand as the low point for chemicals production going back to before the pandemic, Cefic added, but the 4.3% annual improvement for the same period this year does not yet represent a pronounced recovery. Second-quarter 2023 productivity had plummeted over 12% compared to the same period in 2022.

“Given the lack [of] demand growth, the European chemical industry production volumes are still far from the pre-COVID levels,” the group said.

Despite gradually firming output, demand remains depressed, and capacity utilisation declined slightly during the quarter, to 75.2%, with that trend continuing into July.

Despite capacity rates substantially below the long-term average of 81%, the longstanding destocking trend in the sector may have come to an end in March, with July standing as the fourth consecutive month of increasing stocks.

The sector outperformed general industrial productivity in the first six months of 2024, Cefic said, which saw a 3.6% decline year on year.

This is having a knock-on effect on chemical company order books, while energy prices continued to be 4.7 times higher than in the US in July. Gas prices in the first half of the year were 70% above the 2014-2019 average in Europe, Cefic added.   – ICIS –