The European Chemical Industry:
Trends and Outlook
ECSPP Members Meeting and European Symposium
Dr Moncef HADHRI (Chief Economist)
Cefic Industrial Policy
mha@cefic.be
September 25, 2014
The European chemical industry is key for
economic development and wealth
 Contributes to 18% of the
world’s chemical sales (2012)
 Represents 29,000
companies (96% SMEs)
 Employs 1.1 million people
(2013)
 Generates € 558 billion of
revenues (2012)
 Creates a trade surplus of
€ 48.7 billion (2013)
Source: Eurostat and Cefic Chemdata International
Sales 2012: € 558 billion
(share %)
It is one of the largest industrial sectors
in many regions of the European Union
Source: Eurostat SBS and Cefic analysis June 2014
EU chemicals is the firth leading manufacturing sector,
accounting for 7% of total added value
EU industrial platform is losing importance
in the EU economic activity
The EU ambition is to get back to 20% GDP contribution
Despite the strength of the chemical sector,
current situation gives cause for concern
Output remains nearly 10% below the pre-crisis level
EU chemicals sales almost double in 20
years, while its world market share halved
This is a “dilution effect, a trend expected
Source: Cefic Chemdata International
to continue in the future
4
World chemicals output doubles as
emerging markets sales surge
Growth has been fastest in emerging economies
Source: Cefic Chemdata International
3
And this trend will continue
Global chemicals production in value
2030
2013
2002
Source: IHS and cefic analysis (for 2002)
CAGR World 3.7 % (2013-2030)
Growth in post-recession Europe remains low, mainly
due to mature markets and ageing population
What are the key factors affecting
competitiveness of the EU chemicals sector?
•Energy and Raw Materials
•Regulatory Stability and Consistency
•Capital Investment
•Innovation
•Access to Markets
•Skills and People
•Logistics and Infrastructure
Advantaged energy and feedstock prices
are a clear enabler of competitiveness
This is boosting profits abroad and attracting billions
of dollars in investment
Ethylene cost stands for 60% of total
production cost
Ethylene is the highest volume building block in
the chemical industry globally
Barriers to growth: views from CEOs of the
German chemical industry
64%
Increasing costs for Energy and Raw materials
56%
Regulatory requirements in the EU
50%
Lack of qualified personnel
29%
Increasing international competition
National market regulations
14%
National tax schemes
14%
13%
Access to finance
Other
CHEMonitor, January 2011
3%
Cumulative number of EU regulation on
HSE is killing the business of chemicals
Number of EU regulations on HSE, 83% more in 9 years time
Investment in the EU chemicals industry
has been following a worrying trend
Investment is a key factor pointing to a loss
of market attractiveness for production
Capital intensity is both an indicator of loss of attractiveness
as well a driver of future competitiveness
4
Europe is facing a number of challenges to
its leadership on the global market
 Geographical shift towards the Middle East and Asia
• Structural overcapacities in a number of chemical segments on EU
markets
• The chemical industry will continue further consolidation
• Only strong chemical clusters in Europe have a future
 Shift in business models
• Energy efficiency and raw materials management request adapted
processes within the chemical industry
• Innovation and high tech solutions hold the key for the future
 Demographical shift and climate change
 Chemical industry will provide solutions to these challenges.
But will it happen in Europe?
Can we remain Competitive?

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

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Large integrated domestic
market with strong customer
industry clusters
High international orientation
and global networks to
external customer industries
Skilled and motivated
workers and scientists




Constant adaptation to
globalised markets
Strong innovation efforts will
generate new growth
clusters: Efficient Energy use,
health and new materials
which could solve upcoming
societal mega challenges

High energy and feedstock costs
High Regulatory Compliance Costs
(eg REACH)
Lack of a “Common Industrial Policy”
or a “Common Energy Policy”
Non-energy raw material availability
and cost issues (eg. biobased
feedstock, rare earths, minerals)
Mature market, ageing population,
risk aversion of societies
Sustainability as a strategic choice for
global challenges
Health &
Nutrition
9 billion people Construction 67% of the world
will live on earth & Housing population will live
in cities by 2025!
by 2050!
 How can we guarantee
food and water supply
for everyone?
 What are possible
benefits and
contributions of plant
science?
 What does future
architecture look like?
 Which materials
are needed to make
energy consumption
more efficient?
Energy & 50% more
Mobility &
1.2 billion cars
Resources primary energy Communication will drive on
needed in 2030!
earth by 2020!
 What is the ideal
energy mix of the
future?
 How big is the stake
of renewable energy?
 How can we reduce
emissions and fuel
consumption ?
 What will future cars
be made off ?
Where will we be tomorrow?
“He who speaks about the future lies,
even when he tells the truth.”
(Proverb from Middle East)
GDP
Cost
CHEMICA
LS
TRADE
European
Chemicals
Growth
CONFID
ENCE
CUSTOM
ERS
Where will we be tomorrow?
2013: - 0.3%, 2014: 1.3%, 2015: 2.0%
Outlook revised slightly down compared to June 2014
Back-Up Slides
Providing modern products and enabling
technical solutions in virtually all sectors
Base chemicals
Transfer of
Fine and specialty
chemicals
intermediate goods
innovation
sustainability
competitiveness
And an important source of direct and
indirect employment
% of EU Manufacturing employment (year 2010)
Source: Eurostat SBS and Cefic analysis June 2014
Chemicals contributed to 4% of EU manufacturing employment
The de-industrialisation in Europe is more
than reality
Less demand is generated for the EU chemicals industry