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Atradius takes a look inside the chemicals sector PDF Print E-mail
Wednesday, 29 July 2015

Leading trade credit insurer Atradius reveals that the chemicals sector is performing well but change could be on the horizon.

The latest Market Monitor report by Atradius is an in-depth review of the international chemicals sector.

Having accurate and up to date information is critical to businesses at all levels and the regular market monitor publications are part of a suite of information reports produced by Atradius to support UK companies and help drive forward business growth and international trade.

The Market Monitor confirms that overall the sector has continued to perform well. However, the report also reveals that a change could be on the horizon for European chemicals businesses.

Jason Curtis, Head of Corporate Accounts at Atradius UK, said: “At first glance the chemicals sector appears to be performing well, with continued growth in many of the subsectors, payment performance has remained positive and insolvency rates are low compared to other industries.

“However there are signs of change, especially for European chemicals businesses.   International competition, for example from China and the US, is increasing and this is already beginning to have an impact in some segments. In France, where profitability in the basic chemical products segment is strongly dependant on volume, change to energy costs is quick to have an impact and some French businesses have taken steps to restructure activities to maintain competitiveness.

“Looking at the sector as a whole, the picture remains positive and that means that there are opportunities for UK businesses.  As always, information is the key to success and gathering data on the local market conditions where you want to do business is a must – this is where your credit insurer can help.”

Outlook for Chemicals Sector - Highlights:

China
    •    Growth is slow but remains solid; however overcapacity in the industry is an issue as demand is weakening in some important buyer industries
    •    Payments take 60 to 90 days, payment delays are not expect to increase in 2015
    •    Smaller, privately-owned businesses are more vulnerable to solvency and liquidity problems

France

    •    Growth continues, notably in the organic chemicals sector, while international competition increases, especially with US chemical businesses that benefit from lower energy prices
    •    The industry is characterised by a low level of insolvencies and it is expected that the number of insolvencies will continue to decrease in 2015
    •    The refinery sector suffers from overcapacity and has seen large losses

Germany

    •    Growth is expected to increase by 1.5% or less in 2015 while sales prices are expected to decrease by more than 2%
    •    Payment behaviour has always been better than average with payments taking around 45 days
    •    The chemicals industry has a lower insolvency rate than other German industries

Spain

    •    The Spanish chemicals sector obtains 57% of revenues from export markets and has increased its exports by more than 170% since 2000 but many businesses are operating with tight margins as a result of higher prices for raw materials and growing global competition
    •    The pharmaceuticals subsector has experienced a gradual recovery since the second quarter of 2013
    •    Payment behaviour depends upon company size, sector activity and company location and on average payments take 60 days

United States

    •    The chemicals sector is benefiting from on-going US economic growth and is one of the lowest-cost producers globally
    •    Competitiveness has boosted export demand and driven significant flows of new capital investment into the sector
    •    Profit margins are generally stable and insolvencies are expected to continue to decrease in 2015
    •    The energy subsector generally requires a more cautious underwriting approach due to the lower oil price
     
Atradius’ Market Monitor also includes reports on Belgium, Italy, Mexico, The Netherlands, Singapore, Switzerland, Turkey and the United Kingdom. To read the full report, visit www.atradius.co.uk

(Source - Atradius Press Release)
 

 
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