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Ground State - Growth of EU Chemical Industry to Dip in Future

Dec 19, 2007

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Chemistry and chemicals has always been the talk of the scientific community, thanks to the fears of ‘chemical war’. But these dangerous products of science make the building blocks of several other products. So all the countries around the world are enhancing their chemical production to fortify the foundation of other related industries. And European Union (EU), till recently, was leading the worldwide chemical production. But now, the emerging Asian countries have left it behind, says a recent report "EU Chemical Industry Analysis" by the leading market research company RNCOS. But despite this slump, EU is still at the core of production and R&D activities of the global chemical industry.
As per the research, the EU chemical industry is projected to forge ahead at a CAGR of nearly 3.2% during 2007-2010. The major reason for this modicum rise in the industry is stiff competition from the low cost production bases in Asia and Latin America. As most of the EU countries are reaching maturity, they are estimated to move ahead in line with their respective real GDP. On the other hand, the chemical markets of Asian and Latin American nations are augured to witness much faster growth due to their under-developed nature, prompting chemical manufacturers to flock there to set up production facilities, thus threatening the future of EU chemical market. Also, as the EU chemical industry relies on exports (both inter and intra EU), low cost bases pose a challenge to it.
Moreover, REACH Regulation has surfaced as the biggest threat of recent decades to the EU industry. During 2007-2010, the chemical industry will have to expend over Euro 2 Billion to make an estimated 80,000 registration dossiers and conduct additional tests. But several substances generate such small profit margins that they won’t be able to even equal the additional cost. So the production base of the chemical industry is anticipated to grow at a sluggish pace, indicating that the potential of the region’s industrial innovation too is in mist. 
But, as the RNCOS report says, the supportive industries of the EU chemical industry, including paint, plastics, cosmetics, fertilizer chemicals, and automobile, will keep the industry in motion.
The report comprehensively discusses the sectoral production, sales, and trade of the chemical industry of EU countries, coupled with driving forces and opportunity areas. Based on this analysis, the report has charted out a future forecast of the industry.
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