BAKU, Azerbaijan, Dec.9. Europe is set to lose global market share for the chemical industry, with China (already the largest player) poised to benefit, Trend reports Dec.9 with reference to the Economist Intelligence Unit (EIU).
EIU report reveals that the chemicals sector is second only to metals in terms of energy intensity, with natural gas being a feedstock for many chemicals as well as a source of heat generation, making substitution particularly difficult.
“Production of ammonia (of which natural gas is a feedstock) is particularly uncompetitive at present, and about 70 percent of Europe’s fertilizer production capacity has been halted. Most will not be restarted, raising risks for crop yields in the short term and a loss of market share in the longer term. BASF, Germany’s largest chemical firm, uses as much energy annually as the energy usage of Denmark. With the European cost base already higher than in other developed markets even before the crisis, and set to remain at this elevated level throughout our forecast period (2023-27), this is no longer a profitable business model, and the company plans to permanently downsize its operations in the region,” reads the report.
EIU believes that the wider recession will reduce demand in Europe, further eroding the chemicals sector.
“Demand for industrial fibers, polymers and plastics used in construction and car manufacturing is falling, and inputs for (now idled) industrial processes, such as caustic soda, vital for aluminum smelting, are no longer in demand.”
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