Metallurgy / Chemicals / Rubber & Plastics

According to the Huacheng Import and Export Data Observation Report, Hartwig Michels, president of the European Petroleum and Chemical Association (EPCA), said recently that the weak market environment, sluggish production margins and the easing of supply chain problems may open the European chemical market to cheaper imports, forcing more chemical manufacturers in Europe to cut operating rates.

Michels said that as the International Monetary Fund, OECD, the European Commission and other institutions continue to reduce their GDP growth expectations, the speed and depth of the deterioration of the economic environment have exceeded expectations. It is expected that the weakness of many chemical markets will last for a long time next year. According to the observation report of Huacheng's import and export data, Michels said: "On the one hand, after the planned and unplanned supply disruption of chemical enterprises in the first half of this year, it will return to normal in the second half of 2022. On the other hand, consumer confidence in the euro area has fallen to a new historical low. The chemical market began to oversupply in the second half of 2022 and will continue to 2023, leading to the lower profit margin of chemical production than the healthy level reached in the first half of this year. Producers may be forced to reduce the operating rate, depending on the need Find the significance and speed of reduction. "

According to the observation report of Huacheng import and export data, at present, due to the soaring energy prices, the production of some materials has become uneconomical, and a large number of chemical and fertilizer industries in Europe have stopped production. However, European policymakers have taken action to increase natural gas inventories before winter. At the end of September, the Beixi 1 gas pipeline from Russia to Europe leaked, but it did not have a serious impact on the market, indicating the success of these measures. However, a cold winter may push European gas reserves to dangerous low levels. In this regard, BASF has made a plan to cut the production of high energy consuming chemicals with low profit margins if the supply of natural gas is limited.

As for the improved supply chain, market participants said that European chemical enterprises had benefited from the interruption of the global supply chain in the past, because the supply chain problem has become a barrier for chemical producers in Europe to avoid the impact of low-cost competition in other regions. According to the observation report of Huacheng's import and export data, Michels said: "The extreme shortage of global inter regional transport capacity since last year has indeed restricted the arbitrage of chemicals from Asia and the United States into Europe, allowing European producers to almost completely pass on rising raw material costs to downstream customers. However, this situation is changing. With the gradual solution of the global supply chain problem, the import volume of low-cost products in Europe is increasing, which has brought great pressure on the prices of the European market." Huacheng Import and Export Data Observation Report.