In 2009, the European chemical industry was facing significant challenges, largely driven by the expansion of new petrochemical facilities in the Middle East. The internal economic environment deteriorated rapidly, creating a difficult situation for manufacturers across the board. During the fourth quarter of 2008, basic chemicals in most European countries experienced a decline of approximately 6 to 7%. While paint and coatings production also fell, the drop was less severe compared to that of basic chemicals.
Experts from the Chinese Phenolic Resin Network noted that the ongoing economic downturn, combined with overcapacity in the petrochemical sector and uncertainty surrounding oil price trends, left European chemical companies operating in a highly challenging market. Petrochemical producers and those manufacturing bulk chemicals were hit the hardest. Moncef Hadhri, Chief Economist of the European Chemicals Commission, highlighted that 2008 marked the first decline in European chemical production since 2003. Except for a relatively strong performance in the first quarter, the industry struggled throughout the remaining three quarters of the year.
The financial crisis began to impact the real economy more deeply, accelerating declines in key downstream sectors such as construction, automotive, machinery, and equipment manufacturing. As a result, the European chemical industry found itself increasingly unstable. Hadhri emphasized that the era of rapid global economic growth had ended, and the world was now grappling with the worst financial crisis in a decade. Recent economic indicators clearly showed that global activity and business confidence continued to weaken.
Many analysts pointed out that volatile raw material prices during the second half of 2008 led consumers to expect further price drops in the future. This expectation caused businesses to hold onto existing inventory rather than restock as they normally would. Such behavior negatively impacted demand. In response, chemical manufacturers were forced to temporarily shut down production lines to manage reduced demand. However, prolonged idleness made it harder to restart operations when demand eventually recovered, and some companies were forced to abandon their facilities altogether.
Additionally, the start of 2009 brought new competition as several major petrochemical plants in the Middle East came online, placing even greater pressure on European producers. With rising global supply and weak demand, the outlook for the European chemical industry remained bleak.
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