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EU Chemical Sector Suffers in Global Competitiveness

A report commissioned by Cefic and produced by Oxford Economics has concluded that the EU chemical industry’s inability to compete in the global arena has eroded its share of global exports. The EU chemical industry accounted for 31% of global market share in 1991 and just 21% of global market share in 2012. The study argues that the reason for this decline is poor competitiveness and not the global recession. Compared to the oil-rich Middle East, the EU’s energy costs are exceptionally high. And the rising prominence of the US energy sector vis-à-vis the shale oil fields has also relegated the EU chemical industry to the background. The problems in the EU are compounded by increasing regulation and decreased investment. The hardest hit sectors in the EU chemicals industry are polymers and petrochemicals – which comprise approximately 50% of all European Union chemical exports.

Chemical export market share 1990-2014

Chemical export market share 1990-2014 – from the Oxford Economics report

Ways of Reversing the Trend

The Oxford Economics report suggested that one way of reversing the trend is to reduce energy costs, and also calls for increased R&D in process innovations and product innovations. These are key areas for strategic growth in the chemical sector. By employing such measures the EU chemical sector could expand job prospects by as much as 500,000 with an estimated boost to Gross Domestic Product (GDP) of €35 billion. New Cefic President Jean-Pierre Clamadieu believes that the EU’s chemical industry could become more competitive as a result of these proposed measures. The European Union’s chemical trade surplus hit a record high of €48.7 billion last year, however the net exports figure for the first 7 months of this year dropped by €2.7 billion year on year. The decreased revenues are largely the result of weak demand from the US and Asia, and increased demand for oil from the Middle East and the US.

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