facts and figures 2010 report

8/8/2019 Facts and Figures 2010 Report

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Facts and Figures 2010

For more information please contactDr. Moncef Hadhri: [email protected] Unless specified, chemicals industry excludes pharmaceuticals

Unless specified, EU refers to EU 271

Facts and Figures:

The European chemical industryin a worldwide perspective:2010


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Chapter 1 Profile of the Chemical Industry

1.1 World chemicals sales

The European chemical industry can still be portrayed as vibrant and strong.However, worldwide competition is getting fiercer. In 2008, world chemicals saleswere valued at 1950 billion, an increase of nearly 5% compared to the previousyear. With 566 billion, the EU chemical industry is still in a top position, but has lostits first place in the ranking to Asia, mainly due to the rise of China. Taken together,the EU, Asia and NAFTA (North American Free Trade Area) account for 88.6% ofworld turnover.


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1.2 World chemicals sales (contd)

1.2 World chemicals sales by region: 1998 versus 2008

Developments in the previous 10 years (1998-2008) show that the EU was theleader in world chemicals sales but has gradually lost ground against Asia.Comparing 2008 to 1998, the contribution of the EU to world chemical sales wasreduced by 4.8 percentage points. In fact, Europes sales have been growingcontinuously, but world chemical sales are growing faster. The value of wordchemicals sales increased by 78% in 2008 compared to 1998.

Source: Cefic Chemdata International, *Asiaexcluding China, Japan and India

1998: 1095 billion 2008: 1950 billion


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1.3 World network of chemicals trade flows

1.3 Regional shares in world exports and imports of chemicals

In 2008, the key trading regions were the EU, Asia (including China and Japan) andNAFTA. The EU was the world's leading exporter and importer of chemicals,accounting for 42% of global trade (exports + imports). This includes intra EU trade,mainly for reasons of comparison with other regions, as their figures include thistrade as well.

Source: Cefic Chemdata International, intra EU trade included


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1.4 Geographic breakdown of EU chemical industry sales

Germany is still the largest chemicals producer in Europe, followed by France, UKand Italy. Together, those four countries generate 62% of the EUs chemicals sales(351 billion). Adding the Netherlands, Spain, Belgium and Ireland raises the shareto 88% (498 billion). Poland is the biggest new EU country, representing 2.3% oftotal EU chemicals sales.


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1.5 Sectoral breakdown of EU chemical industry sales

Chart 1.5: Sectoral breakdown of EU chemicals industry sales: 2002 versus 2008

The output of the EU chemicals industry covers three wide ranges of products: basechemicals, speciality chemicals, and consumer chemicals.

Base chemicals cover petrochemicals and derivatives and basic inorganics.They are produced in large volumes, and are sold to the chemical industryitself or to other industries. In 2002, they represented 58% of total EUchemicals sales. In 2008, that share increased to 64%.

Specialty chemicals cover the auxiliaries for industry, paints & inks, cropprotection, and dyes and pigments. Specialty chemicals are produced in smallvolumes but nevertheless represented 23% of total EU chemicals sales in2008.

Finally, consumer chemicals are sold to final consumers: soaps anddetergents, perfumes and cosmetics. They represented 13% of total EUchemicals sales in 2008.

Data Source: Cefic Chemdata International.


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1.6 EU chemical industry sales structure

EU chemicals sales were estimated at 456 billion in 2009. Sales to EU partnercountries have more than doubled over the last fifteen years (1995-2009). TheEuropean internal market has thus had a very positive effect on chemicals.Removing both trade and non-trade barriers inside the EU area has been a keydriver for the growth and competitiveness of the EU chemicals industry. The internalmarket of about 500 million consumers is a key factor of competitiveness. With theaccession of the ten new Member States the internal market has received animportant push.


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1.7 EU chemical industry sales structure (in %)

By 2009, nearly half of sales were intra EU (excluding domestic sales). While intraEU sales are rising, the importance of domestic sales is decreasing, accounting onlyfor 26% of EU sales. 26% of chemicals sales are exported outside of the EU area.NAFTA, neighbour countries of the EU and Asia are the key markets.


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1.8 Added value in EU chemicals and other manufacturing sectors

Chemicals is the second leading manufacturing sector (after pharmaceuticals) interms of "value added per employee" in Europe, followed by basic metals andradio, television and communication, automotives and office machinery andcomputers (data 2006). The chemical industrys value added per employee is 84%higher than the average of manufacturing sectors.


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1.9 The EU manufacturing industry: gross operating surplus/ turnover

With regard to its gross operating profit, chemicals compares favourably to othermanufacturing sectors as well. The ratio of gross operating profits to sales is the 8thhighest in industry and is well above the manufacturing average.


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1.10 Contribution of the chemical industry to the EU economy

The chemical industry's contribution to the EU gross domestic product amounts to1.1%. This may seem small at first sight, but should be re-assessed taking intoconsideration both the shrinking contribution of industry as a whole to GDP inadvanced economies (23.7% in 1995 versus 17.6% in 2009 in the EU) along with arise in services. Additionally, there is a wide contribution of chemical products into allbranches of the economy; for example in Germany chemicals are the most importantsupplier of innovative materials for the industry. Chemicals represent 10% of thesupply of input and intermediary products and they show an above average R&Dcontent.

1.10 Contribution of the chemicals industry to the EU economy (2009)

Data Source: Cefic Chemdata International and Eurostat, *Public administration and defence, compulsory social security; education; health

and social work; other community, social and personal service activities; private households with employed persons, ** Wholesale and

retail trade, repair of motor vehicles, motorcycles and personal and household goods; hotels and restaurants; transport, storage and

communication, ***Financial intermediation, real estate, renting and business activities


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1.11 The EU chemical industry: number of enterprises, sales and employmentby size-class

The EU chemical industry comprises 29 000 enterprises (data covering firms with noemployees are excluded), 96% of which have less than 250 employees and may beconsidered as small and medium sized enterprises. These account for 28% of salesand 35% of employment. Only 4% of the EU enterprises employ more than 249employees and generate 72% of total chemicals sales.


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1.12 Public image of the European chemical industry

In a pan- European poll on the image of the EU chemical industry, chemicals in 2008are in 6th position out of 8 benchmark industries and rank below the average. Apartfrom Nuclear Energy which registered a slight improvement, most sectorsexperienced no significant changes or followed in some cases a negative trend suchas Food, Electricity and Petrol/Oil. The image of the chemical industry in 2008 is stillat the same level as in 2006. This result is also in line with the average of allindustries where no improvement has been perceived during the last two years.


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Chapter 2 International Trade

2.1 External trade of EU chemicals

The EU has always been an important player in the global chemicals market and sofar it has been in a position to benefit from trade opportunities. In 2009, the EUgenerated an extra-EU trade surplus of euro 42.6 billion, which represents abouteuro 3.4 billion more compared to 2008. As a consequence of the economic crisis,extra-EU chemical exports declined by 13.3% while imports to the non-EU area fellby 16.8%.


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2.2 Extra-EU chemicals trade (exports + imports) by region: 1999 versus 2009

Extra-EU chemicals trade (exports + imports) in 2009 was mainly attributable toNAFTA (North American Free Trade Area), (27.5%), Asia excluding Japan (27.2%),and other European countries (not belonging to the EU27) (25.6%). Taken together,NAFTA, Asia and Rest of Europe contributed in 2009 to 80.3% of the extra-EUchemicals trade. Comparing 2009 to 1999, the contribution of the three mainpartners of the EU increased by 13.5% points (from 66.8% to 80.3%).

27.5%

5.3%

5.4%

1.3%25.6%

5.4%

27.2%

2.3%

Source: Eurostat and Cefic, *Asia excluding Japan

1999: 128 billion

29.9%

4.8%4.8%

1.6%19.9%

7.7%

17.0%

14.3%

NAFTA Latin America

Africa Oceania

Rest of Europe Japan

Asia* Others

2009: 191 billion


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2.3 Extra-EU chemicals trade flows with major geographic blocs

The three major geographic blocs trading with the European Union in 2009 wereNorth America, Asia (excluding Japan) and Rest of Europe. Rest of Europe plays amajor role. The EU has a surplus with each main trading region (NAFTA, Asia,Japan, Latin America, Africa, Rest of Europe and Africa) and has broadly retained itsmarket share in global chemicals sales over the last decade. However, the TradeCompetitiveness Indicator (TCI) - an indicator that compares the trade balance to thetotal trade (exports plus imports) of a region - reveals a deteriorating competitivenessof the overall EU chemicals industry since 2003. This means that imports are

growing faster than exports.

NAFTA20.5

32.2

LAC**3.1

7.0

Africa2.4

8.0

Rest ofthe World

1.4

5.4

Rest ofEurope

29.5

19.5

Asia*29.6

22.5

Japan5.3

5.1

EU chemicals trade flows in billion


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2.5 EU trade competitive analysis broken down by region

A look at the EUs trade balance in relation to a number of key countries and regionsshows that the position is deteriorating with certain key countries in Asia for almostall sub-sectors. India and China are the only two countries with which the EUcurrently has a trade deficit for chemicals in overall.

Trade development with the Middle East indicates that this region increasingly usesits feedstock availability to develop an integrated chemicals value chain and tostrengthen its position in a wider range of basic chemicals. Russia has up to nowonly been successful in using its competitive advantage regarding raw materials inbase chemicals.

The trade position of certain important sub-sectors, in particular the raw material andenergy -intensive parts of the chemicals industry, namely basic organics such aspetrochemicals, and basic inorganics such as fertilizers, shows signs of seriouserosion. Their global competitive position is at risk.

EU has a trade deficit and itscompetitive position weakened

EU has a trade deficit but its weakcompetitive position improved

EU has a trade surplus but its positive

competitive position weakened

EU has a trade surplus and its healthycompetitive position improved


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International trade is vital for growth and employment of the European chemicalsindustry. The industry has placed itself at the centre of global trade and thusdepends vitally on open markets. As growth is concentrated in the emergingeconomies, favourable access to these markets is of high importance.


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Chapter 3 Growth of the Chemical Industry

3.1 Growth of production, trade and consumption

Over the years 2004-2009, chemicals sales and consumption registered nosignificant growth, (0.3% versus 0.1%). The average growth rate of imports over thelast five years (2.5%) exceeded slightly that of exports (2.2%).


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3.2 Chemicals growth performance against total industry

In addition to providing for customers' present needs, the chemical industry isconstantly developing new and improved products and processes, creating andserving completely new markets. This enables other industries to be more efficientand productive by using more effective substitute materials and products. Chemicalsserve as input into essentially all sectors of the economy, and consequently dependon their economic performance. In the period 1999-2009, the chemical industry hadan average growth rate of 0.4%, which is slightly higher than the average growth rateof total manufacturing (0.3%). Both averages were too low as compared to the longterm averages. These are the consequences of the year 2009 where production wasdramatically declined compared to the pre-crisis level.


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3.3 EU chemicals production growth: latest trend and outlook

The EU chemicals industry was affected strongly by the spill-over effects of theeconomic and financial crisis. The magnitude of the economic crisis (which hasstarted during the second half of 2008) was much more severe than expected andmany companies were certainly not expecting such a dramatic downturn. Chemicalcompanies are experiencing strong pressure on margins due in particular to the lackof demand from customers and weak consumer spending. Moreover, the Europeanchemicals industry is facing additional pressure from its competitors outside Europeand mainly from the Middle East where new petrochemical capacity is built-up andvery likely a large proportion of its output will find its way into European markets.

All in all, the European chemicals industry reached its lowest point in December

2008, and since that time, production has been dragging along posting mild growtheach month at best, but remains sharply down compared to last year's figures(2008). Output in the EU chemicals industry experienced a decline of 11.3% in 2009compared to 2008.

Looking ahead: Cefic forecasts a year-on-year production growth of 9.5% for 2010and 2% in 2011 (Source, Economic Outlook, June 2010).


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Basic chemicals sectors are now registering the fastest rebounds, but in all caseschemicals output* remains well below previous levels. Growth in chemicalsproduction has continued more strongly and for longer than was expected at the timeof our November 2009 forecast. However, the overall economic recovery in Europeremains fragile. Consequently, Cefic still expects a pause in the rate of growth ofmost commodity chemicals sectors, since underlying market demand must berebuilt: a recovery built on inventory corrections alone is not sustainable.

Surveys also indicate that capacity utilisation within the industry remains well belownormal 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 furthereconomic shocks resulting from such a scenario.

The development of the EU chemicals industry will also depend on the effectivenessof consolidation measures taken within EU countries. The European chemicalsindustry continues to face relentless global competition. Access to raw materials andenergy at globally competitive prices remains a prerequisite for a successfulrecovery.


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3.4 International comparison of production growth of the chemical industry

Over the past five years (2004-2009), the EU chemical industry showed the lowestgrowth rate compared to the biggest world regions and it is, with -1.4%, well belowthe world average growth of chemicals of 1.7%. Asia Pacific region is booming, withaverage growth rates in chemicals of 5.2% over the past five years. Asia is heavilyinfluenced by the extraordinary performance of the Chinese chemicals sector and abooming economy and industrial sector.


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3.5 International comparison of production growth of the chemical industry(contd)

The long-term trend shows that also over the years (1999-2009), the Europeanchemical industry showed the lowest growth (0.1%), whereas Asia Pacific (4.9%)and Latin America (2.5%) started their steep rise several years ago.


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3.6 International comparison of sales of the chemical industry

In 2008, The 30 major countries had a combined sales turnover of 1793 billion.Eleven of the top 30 world chemicals majors countries are Asian and generated achemicals sales of euro 709 billion, which represents nearly 40% of the top 30 and36% of world chemicals share. Nine of the top 30 are members of the EuropeanUnion (27), representing 26% of world chemicals sales.


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Chapter 4 Costs

4.1. Cost structure

In 2006, purchases by the EU chemical industry accounted for 76.3% of the salesvalue (covering both trading and other purchases costs). Among purchases, it ispossible to single out the costs of trading. Trading represents the cost of chemicalspurchased from third parties and resold in their original condition, and amounts to6.7% of the sales value.

Other purchases costs accounted for some 69.6% of the chemicals sales value, andthey cover energy costs and other production costs. It needs to be underlined thatenergy costs from the purchase of feedstock and fuel and power represent a keyfactor in cost competitiveness of the EU chemicals industry. Certain sub sectors aremuch more sensitive to energy cost as for them it represents a more important inputfactor - for example the Chlor Alkali industry.

The remaining 23.7% constitutes the gross value added of the sector, whichcomprises gross operating surplus (11.2%) and payroll (12.5%). The gross operatingsurplus is defined as profits before taxes, financial charges and depreciation.


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4.3 Labour cost per employee and productivity

Productivity of EU chemicals is still increasing at a significant pace 2.2% on anaverage over the years (1999-2009) - and is therefore rising 1.1% slower than thelabour cost per employee. The modest average of labour productivity over the pastten years is considerably affected by the economic and financial crisis which startedin 2008. The year 2009 was really dramatic for the EU chemicals industry whenproduction declined by 11.3% compared to 2008. Skipping 2009, the analysis showsthat labour productivity and labour cost per employee are increasing relatively at thesame rate (3.3%).


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Chapter 5 Energy

5.1 Energy use by source

The chemical industry upgrades energy and raw materials into products required byother industrial sectors as well as by final consumers. The cost of these inputs is aprime factor in competitiveness on world markets.

From the energy sector, it consumes coal, oil products, natural gas, electricity andrenewables, using them both as raw materials (feedstock) and as power and fuel. In2007, the European chemical industry (including pharmaceuticals) used a total of138.7 million tonnes of oil equivalent (TOE) of energy. Feedstock accounted foralmost 61% of total energy products and fuel and power for nearly 40%, taking allsources of energy into account. This means that most of the energy used by thechemical industry as feedstock is stored in the products and can still be reused,

through recycling (Chart5.1).

Regarding other raw materials, the chemical industry also uses a wide variety ofnatural or processed starting materials, e.g. metals, minerals and agricultural rawmaterials (sugar, starch, fats, etc.).


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5.2 Efficiency in energy consumption

For many years, the EU chemical industry (including pharmaceuticals) has madestrenuous efforts to improve energy efficiency, reducing its fuel and power energyconsumption per unit of production. In 2007, energy consumption per unit ofproduction in the chemical industry (including pharmaceuticals) -energy intensity-

was 55% lower than in 1990 (Chart 5.2).


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Energy efficiency is subject to decreasing returns: the higher the level of energyefficiency attained, the more difficult it becomes to make further improvements.However, over the last 17 years the chemical industry has succeeded in increasing

continuously its output and at the same time keeping its energy input constant, andconsequently lowered its energy intensity significantly by 4.6% per year on average.Chart 5.3 shows that energy intensity in the US chemicals industry has beenreduced over the past seventeen years (1990-2007) but not as much as in Europe(-1.9% per year on average)


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Chapter 6 Employment

6.1 Employment

In the EU, some 29,000 chemical companies employ a total staff of about 1.205million. Employment in the EU chemical industry has decreased by 2% over the past10 years (1999-2009). Employment in the USA has experienced a steeper declinefor chemicals over the same period with a decrease of 2.9%.


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6.2 Labour productivity

The EU chemical industry is a leading industry with high skills and productivity, dueto high investment per employee and highly educated and trained employees. As aconsequence, labour productivity in the EU chemical industry rose by 2.2% p.a. overthe period 1999-2009.


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6.3 Investment per employee and personnel costs

Investment per employee and personnel cost are two important factors for theinternational competitiveness of the European chemical industry. The equipment ofworkplaces in the chemical industry is top quality and investment per employee israther high-double the manufacturing average. Chemicals are the first manufacturingsector in terms of investment per employee.


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6.4 Investment per employee and personnel costs (contd)

Additionally, the labour force employed in the chemical industry is more qualified,trained and better paid than the average industrial worker. Personnel costs for theEU chemical industry are 47% higher than the average of other manufacturingsectors. After pharmaceuticals, chemicals is the second leading sector in terms oflabour cost per employee followed by the automotive and other transparentequipment sectors.


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6.5 Labour productivity: Chemical industry versus total manufacturing

Due to intensifying global competition, the EU chemical industry has taken vigorousrestructuring and cost-saving steps in order to improve its competitiveness over thelast decade. As a consequence, labour productivity in the chemical industry isgrowing faster than labour productivity in the total manufacturing sector: 2.2% and1.6% average annual growth 1999-2009 respectively.


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6.6 Level of education of workers in the chemical industry

Employees with medium and high education account for around 80% of workers inthe chemical industry (data 2005). While the percentage of people with lower andmedium education has been decreasing since 2001, workers with a high level ofeducation are gaining importance, accounting for almost 27% in 2005. The successof the European chemical industry depends on its well trained employees. Skills andeducation are an important factor in international competitiveness and the Europeanchemical industry is facing a global challenge for talent.


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Chapter 7 Investment and R&D

7.1 Chemical industry capital spending in the EU

Investments in innovation (including research & development R&D) are key elementsin securing the future of the chemical industry. They not only promote the adaptationto and the development of new technologies and innovation, but are necessaryprerequisites for the continuous adjustment of corporate structures to the needs ofthe market-place. It is worth noting that the currently available figures on R&Dinvestments give only part of the picture as R&D is only the starting point on the pathto successful innovation. Innovation spending in companies is more and moreincluded under business development.

After some up and down movements in previous years, the ratio of capital spendingto sales of the chemical industry (including pharmaceuticals) in the EU has beendeclining almost steadily since 2000. In absolute figures investment had beengrowing steadily between 1994 and 2000 and then declined almost continuously till2004, with a slight recovery in the next three years (2005-2007).


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7.2 International comparison of capital spending in the chemical industry

The ratio of capital spending to sales of the chemical industry (includingpharmaceuticals) in the EU has been declining since 1999. A similar trend isconfirmed for both Japan and the USA. Over the past years (1994-2006), Japan hasthe highest ratio (4.9%) followed by the EU (4.5%) and the USA (4.2%)


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7.3 International comparison of research and development spending

The high value added products of the chemical industry continuously open up newfields of application and pave the way to progress and innovation in other industries.Typical examples are the health, food, consumer goods, aerospace industry, the carindustry, telecommunications, electrical engineering and electronics. Wide variationsin R&D efforts are observed across the chemical industry. Turning R&D intoinnovation is becoming increasingly important in relation to the competitiveness ofthe region.

Analysing the ratio of R&D spending to sales of the chemical industry it can beobserved that over the past years (1991-2006), the USA had on average a slightlyhigher ratio (2.3%) than the EU (2%), but has decreased to similar levels in recent

years whereas Japan has a ratio (5.3%) around twice as high as the other twotrading regions..


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7.4 Research and development spending in EU manufacturing

EU chemicals account for 8% of total EU manufacturing spending in R&D of 98.5billion (data 2003). If the R&D spending of the pharmaceutical sector is included,chemicals are the top investor in R&D in European manufacturing, accounting foralmost one fourth of total R&D investment of manufacturing.


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Chapter 8: Sustainable Development

8.1 Energy usage and greenhouse gas emissions

The chemical industry works to develop cleaner and safer technologies,waste-recycling processes and new products to safeguard the environment(biotechnology processes, catalysts, membranes, desulphurisation plants, etc.). Oneaspect is increased energy efficiency. Besides increasing the energy efficiency of itsown processes, the chemical industry also helps to increase the energy efficiency ofdownstream users and their products through innovative inputs. Between 1990 and2007, production in the EU chemical industry (including pharmaceuticals) rose by71.3%, while total energy consumption was rather stable and greenhouse gas(GHG) emissions fell by almost 34%.


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8.2 Energy usage and greenhouse gas emissions (contd)

Hence, GHG emissions per unit of energy consumption have been reduced by more

than 34% and GHG emissions per unit of production (GHG intensity) by nearly 62%since 1990. This shows the enormous effort that the chemical industry is making tominimise the environmental impact of its production.


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8.3 Greenhouse gas emission intensity: EU versus US chemical industry

In comparison to the US, the EU has reduced its GHG emission intensity (emissionsper unit of production) much more and is today more GHG emission-efficient. TheUS chemical industry has decreased its emission intensity by 36% since 1990, theEU by 62%.

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