Following a weak start to 2023 and with no imminent recovery of demand in sight, chemical producers in the EU 27 expect to finish the year about 8% in the hole compared to 2022, according to industry association European Chemical Industry Council (Cefic, Brussels; www.cefic.org).

The subdued outlook applies to nearly all segments of the industry’s business, whereby consumer chemicals are “more resilient”, the industry association said.

Underscoring its projections, Cefic said its figures for the first four months of 2023 show there was insufficient momentum to compensate for the slump seen in the final 2022 quarter. And with a 13.5% year-on-year decline in production volume in the first quarter, there are also no signs that business in the rest of the year will develop any better.

Both domestic and export markets remained “very weak” from January to April, with demand from customers generally showing a negative trend. As indicators for European chemical output point to further setbacks in incoming orders, Cefic said inventories will need to be reduced “even further”.

Related: Cefic’s latest outlook: Sunshine, rain

Illustrating how bleak the current picture is, the industry grouping said capacity utilisation rates in the first quarter were similar to those seen during the first Covid-19 lockdown in 2020, hovering around 75% of normal levels.

The combination of high energy prices, the lack of global demand, and competition from domestic companies benefiting from the US investment promotion tool Inflation Reduction Act (IRA) has whipped up a “perfect storm”, Cefic’s director general, Marco Mensink, commented.

In a nutshell, he said “there is simply no business case for investing in Europe now” and called on EU leaders to make private sector investments the bloc’s main priority during the next legislative cycle.

For European chemical producers, the priorities are addressing “urgent challenges” such as high energy costs, new competition for industrial investments from other economies (a nod to the IRA) and a “changing and very complex regulatory framework”, all of which Cefic said continue to reduce predictability for businesses.