In the chemical industry for the revival in sales, the mature markets of Europe (EU), North America and Japan must wait until the second half of 2013.
In 2012, GDP in the EU has decreased by 0.3% and with a 0.4% decrease across the countries which are using the euro i.e. eurozone as expected by the European commission. Accordingly, the GDP in the US might have gone up by 2.2% and in Japan by 1.6%, as predicted by the Organisation for Economic Co-operation and Development (OECD). In 2013, a recovery after the summer is expected to help return the EU to slight GDP growth of 0.4% (0.1% in the eurozone) and this will provide a platform for faster growth of 1.6% (1.4% in the eurozone) in 2014, says the commission.
European chemicals output might have decreased by 2% in 2012, but must expand slightly in 2013 by 0.5. Because of the difficulties in the major customer industries, such as the construction and automotive industries, stemming from the euro crisis and related economic problems in the rest of Europe, at the end of 2012, EU chemicals production was still 8% below its pre-2008 level, according to chair Kurt Bock, Cefic president and BASF.
There would be a 2% growth in the US economy next year and 2.8% in 2014. Whereas Japan’s growth, will decrease to 0.7% and 0.8% in the next two years, according to the predictions of the OECD.
To boost sales, the chemical companies in the EU, North America and Japan have tended in recent years to rely on exports to the thriving markets of the emerging economies and some companies will definitely continue to struggle next year.
China’s normally rapid growth in industrial production fell for the first time below 10%, between March and October. In August, it dropped to 8.9%, its lowest level for three years, but went up to 10.1% in November raising hopes of a recovery. Due to the slight slowdown in China along with a very weak eurozone has impacted trade within Asia such as Japan, despite strong domestic demand in some places, according to Amit Sharda, chemicals analyst at Oxford Economics in the UK.
In Hong Kong, the Industrial production decreased 3% year-on-year, in the second quarter of 2012, while in October it went down by over 2% in Singapore. It also dropped slightly in India in September, according to figures from Haver Analytics, based in New York.
In 2012, economic uncertainties have been the major cause of the 3% fall in output in the global chemical industry. There have been worries about economic trends and market outlooks in areas like southern Europe and the US and some developing regions of the world. As a result, German companies have reduced their inventories instead of buying more chemicals. In countries outside Europe such as Brazil, there is a 15% growth in export sales, according to Henrik Meincke, head of VCI’s economics department.
In the UK, the production of chemicals and pharmaceuticals had decreased around 5% in the whole of 2012, according to figures from the UK Office of National Statistics (ONS). Despite declines in the value of the UK pound, the country’s exports have increased at a rate of 1-2 % points over foreign sales and have also risen more slowly than imports. As a result the country’s traditional trade surplus in chemicals and pharmaceuticals has deteriorated.
On the other hand, the US hopes that there is a boost given to its chemicals sector by the surging output of shale gas. The US chemicals output had dropped by 0.5% in 2012, before entering a period of steadily accelerating growth driven by the shale gas boom. With the increased investment in projects, the increase in chemicals production is expected to reach as high as 2.9% in 2013 and 5.4% in 2014 and a peak of 5% in 2015.The U.S is on the edge to become a major force in exports of petrochemicals and other bulk chemicals with the help of low-cost shale gas. It will take business away from Middle East producers not only in the emerging economies of the Asia Pacific, but also in mature markets like Europe, according to the American Chemistry Council (ACC).