dr moncef hadhri (chief economist) cefic industrial policy mha@cefic.be september 25, 2014
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Dr Moncef HADHRI (Chief Economist)Cefic Industrial Policy
mha@cefic.beSeptember 25, 2014
The European Chemical Industry: Trends and Outlook
ECSPP Members Meeting and European Symposium
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)
The European chemical industry is key for economic development and wealth
Sales 2012: € 558 billion
(share %)
Source: Eurostat and Cefic Chemdata International
It is one of the largest industrial sectors in many regions of the European Union
EU chemicals is the firth leading manufacturing sector, accounting for 7% of total added value
Source: Eurostat SBS and Cefic analysis June 2014
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
Source: Cefic Chemdata International 4
This is a “dilution effect, a trend expected to continue in the future
World chemicals output doubles as emerging markets sales surge
Source: Cefic Chemdata International 3Growth has been fastest in emerging economies
And this trend will continue
Global chemicals production in value
2002
20132030
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
3%
13%
14%
14%
29%
50%
56%
64%
Other
Access to finance
National tax schemes
National market regulations
Increasing international competition
Lack of qualified personnel
Regulatory requirements in the EU
Increasing costs for Energy and Raw materials
CHEMonitor, January 2011
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
4Capital intensity is both an indicator of loss of attractiveness
as well a driver of future competitiveness
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
Þ Chemical industry will provide solutions to these challenges.
But will it happen in Europe?
Can we remain Competitive?
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
9 billion people will live on earth by 2050! How can we guarantee
food and water supply for everyone?
What are possible benefits and contributions of plant science?
Health & Nutrition
Sustainability as a strategic choice for global challenges
67% of the world population will live in cities by 2025! What does future
architecture look like? Which materials
are needed to make energy consumption more efficient?
Construction & Housing
50% more primary energy needed in 2030! What is the ideal
energy mix of the future?
How big is the stake of renewable energy?
Energy &Resources
1.2 billion cars will drive on earth by 2020! How can we reduce
emissions and fuel consumption ?
What will future cars be made off ?
Mobility & Communication
Where will we be tomorrow?
GDP
European Chemicals
Growth
CONFIDENCE
Cost TRADE
CHEMICALS
CUSTOMERS
“He who speaks about the future lies, even when he tells the truth.”
(Proverb from Middle East)
Where will we be tomorrow?
Outlook revised slightly down compared to June 2014
2013: - 0.3%, 2014: 1.3%, 2015: 2.0%
Back-Up Slides
Providing modern products and enabling technical solutions in virtually all sectors
Base chemicals
Fine and specialtychemicals
Transfer of
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
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