Chemical & Engineering News

June 23, 1997


Copyright © 1997 by the American Chemical Society

FOREIGN CHEMICAL INDUSTRY

CANADA

EUROPE

ASIA-PACIFIC


CANADA


The Canadian chemical industry saw factory shipments, exports, and imports rise in 1996. But the growth was tempered by pressure on prices and profit margins. The Canadian Chemical Producers' Association (CCPA) reported that prices declined an average of 6% from 1995 and operating profits were down 25%.

Statistics Canada and Industry Canada report factory shipments for chemicals and chemical products up 1% over 1995, but industrial chemicals - both inorganic and organic - as well as plastics and synthetic resins were down 3%. And prices for chemicals and chemical products slipped 1%, those of inorganic industrial chemic als were up an average of 1%, and organic industrial chemical prices fell an average of 5%. Polyethylene and polystyrene prices had a particularly bad year, each falling 12%.

Canada's chemical exports increased 3%, whereas imports shot up 8%. That brought the 1996 chemical trade deficit to $4.25 billion, up 21% from 1995. The U.S. continues to be Canada's chief chemical trading partner. Based on Standard Industrial Classification codes for the chemicals and chemical products industry segment, 80% of exports were sent to the U.S. and 75% of imports came from the U.S.

"The sustained growth in sales volume we are enjoying speaks well for the restructuring efforts of past years," says Richard Paton, CCPA president. "The aggressive strategies employed by both the private and public sectors are paying off, and that's good for chemical producers."

CCPA member companies say they expect shipments to advance moderately in 1997, bolstered by capital investments that rose 29% in 1996. However, they see further price declines as new capacity comes on-line and customers consolidate to force aggressive pricing policies.


COMPANY RESULTS: Profitability lagged


PRODUCTION: Several declines, many gains


SHIPMENTS: Chemical industry lagged all manufacturing as several product areas slipped


CHEMICAL EXPORTS, IMPORTS


PRICES: Plastics, organics retreated in 1996


TOTAL TRADE BALANCE: Surplus grew...



EUROPE


After two good years, the European chemical industry slowed down considerably in 1996. In many parts of the region, the industry went into a slump in the fourth quarter of 1995, and this carried over to the following year. Despite improvement in conditions during 1996, that beginning helped slow down or even trim growth throughout the industry.

For example, production figures showed a mixed pattern: Output of some basic chemical products was up, but output of others was down. That mixed pattern held true even in Germany, the powerhouse of the region, where chemical production declined overall. Spain was the other major chemical-producing country in the region that had a drop in production last year.

For fibers, a more regional situation emerged. The major fiber-producing countries in Western Europe tended to show either no change or slight drops in production of noncellulosic fibers. And production of cellulosic fibers fell significantly in the region, at least in part because the industry went through serious restructuring programs that involved producers closing plants.

However, fiber production increased in other parts of Europe, with the exception of countries that were formerly part of the Soviet Union. Estimated production, particularly of noncellulosic fibers, indicates that those economies have begun to grow once again.

Those indications are reinforced by figures compiled by the European Chemical Industry Council (CEFIC): The chemical industries in Poland, Hungary, the Czech Republic, and Slovakia - associate members of CEFIC - all showed growth in overall sales, and production indexes indicate renewed expansion in output after the slump that followed the collapse of the Soviet Union.

The financial performance of Western European chemical companies in 1996 was somewhat muted. Results at petrochemical-based companies, for example, showed a slowdown in sales growth and a significant decline in profit margins in 1996 compared with those of the previous year, as petrochemicals settled down from the frothy price levels of 1995 into more sustainable prices last year. Even specialty chemical companies, however, tended to show only small changes in profitability, with modest movement in profit margins up or down from those of the previous year.

Capital spending throughout the industry, however, was up - frequently significantly - in 1996. Countrywide chemical industry statistics showed increased spending on plants and equipment, reflecting the optimism of individual companies. In fact, according to statistics analyzed by CEFIC, capital spending by the Western European chemical industry - which had lagged seriously behind that of the Japanese and U.S. industries since the beginning of the decade - began closing the gap with Japan last year. Capital spending in those two regions in 1990; however, investment in the U.S. has increased nearly 80% in those years.


WESTERN EUROPEAN CHEMICAL INDUSTRY TRENDS: Production up, sales mixed in 1996


MAN-MADE FIBERS: Production continued to slide in Western Europe


PRODUCTION: Declines posted for many major chemicals across Europe


COMPANY RESULTS: Established firms showed mixed picture in profitability...





ASIA-PACIFIC

The chemical industry was pulled in several directions in the Asia-Pacific region in 1996. In Japan, sales and profits at leading chemical companies increased moderately, reflecting the country's improving economy. But there was almost no change in chemical exports and import s. This reflects that Asian countries are building up their own chemical industries and need fewer imports.

Exports and imports of petrochemicals actually declined in South Korea. Nonetheless, production continued to advance strongly. The country is consuming a larger proportion of its output.

Taiwan presented a generally stable picture. But production figures will begin to rocket next year as a major new petrochemic al complex starts up on the country's west coast. In China, there was no change in trends as the production of most chemicals for which statistics are available continued to rapidly increase.


JAPAN

INDUSTRY TRENDS: Slow growth for chemicals


PRODUCTION: Organics, plastics mostly up


COMPANY RESULTS: Profits crept up as headcount went down



SOUTH KOREA

PRODUCTION: Increases for most sectors


PRICES: Plastics, fibers, basic chemical slid


FOREIGN TRADE: Petrochemicals surplus up


INDUSTRY TRENDS: Chemical output up 10%



TAIWAN

PRODUCTION: Some rises, volumes stayed low


FOREIGN TRADE: Organics slumped


INDUSTRY TRENDS: Modest increases



CHINA

PRODUCTION: Ethylene, plastics surged