Brussels, 07 June 2010 - “We anticipate output in the chemical industry* to grow by 9.5% in 2010, and our expectations for 2011 point to a growth of 2% compared to 2010”, says Dr Hubert Mandery, Director General of Cefic, the European Chemical Industry Council.

Cefic anticipates a period of consolidation around the second half of 2010 and early 2011. This explains the marked reduction in growth rate forecast for 2011. Despite the high growth figures for 2010, output at the end of 2011 will still be below previous levels, and it is likely to be another two years before those are seen again.

Chemicals* experienced a sudden fall in output in the second half of 2008 and into early 2009. Despite an almost equally sharp rebound in the second half of 2009, as much of the inventory liquidation in supply chains was reversed, the final 2009 figure showed a fall of 11.3% compared to 2008. Recovery in output levels has continued in the first quarter of 2010, and this is likely to continue in the second quarter of the current year.

Cefic forecasts a year-on-year production growth of 9.5% for 2010 and 2% in 2011. Basic chemicals sectors are now registering the fastest rebounds, but in all cases chemicals output* remains well below previous levels. Growth in chemicals production has continued more strongly and for longer than was expected at the time of our November 2009 forecast. However, the overall economic recovery in Europe remains fragile. Consequently, Cefic still expects a pause in the rate of growth of most commodity chemicals sectors, since underlying market demand must be rebuilt: a recovery built on inventory corrections alone is not sustainable.

Surveys also indicate that capacity utilisation within the industry remains well below normal levels. There remain significant uncertainties in the economic environment. Any defaults on sovereign debt could trigger renewed problems for those banks whose loans turned bad, and the chemicals sector would be sensitive to the further economic shocks resulting from such a scenario.

The development of the EU chemicals industry will also depend on the effectiveness of consolidation measures taken within EU countries. “The European chemicals industry continues to face relentless global competition. Access to raw materials and energy at globally competitive prices remains a prerequisite for a successful recovery,” comments Hubert Mandery.

*excluding pharmaceuticals

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Contact for media enquiries: Franco Bisegna – +3226767394 – fbi@cefic.be

Contact for members: Dr. Moncef Hadhri - +322676722 –mha@cefic.be

Note to the editor: Cefic is the Brussels-based organisation representing the European chemical industry. It represents 29 000 companies that produce 29% of the world’s chemicals and employ about 1.2 million people.