DUBLIN--(BUSINESS WIRE)--Research and Markets(http://www.researchandmarkets.com/research/4c9a00/united_kingdom_pet) has announced the addition of the "United Kingdom Petrochemicals Report Q4 2011" report to their offering.
The decline in the British chemicals industry, which began in 2008, shows no sign of abating, according to BMI's latest UK Petrochemicals Report.
By June 2011 the chemicals industry was operating at 14.1% below levels in 2006 and represented one of the lowest monthly rates of production for nearly three years. The poor performance mirrors the dismal performance of the UK economic recovery, with Q211 manufacturing output down 0.5% y-o-y and economic growth of just 0.2%. The main cause was the decline in exports, which the UK was relying on to stimulate growth across the economy.
Nevertheless, BMI believes the economy is going through a soft patch rather than facing another recession. Moreover, as we have stressed before, the recovery was never going to be linear, with deleveraging and economic rebalancing pressures coupled with a severe fiscal austerity drive, ensuring that petrochemicals output volatility will remain elevated. Yet, even during quarters of manufacturing growth, the British chemicals industry has experienced contraction and a return to pre-recession output levels seems unattainable in the future. There is little upside, particularly considering that the chemicals sector failed to benefit from strong growth in other areas of manufacturing. The author therefore does not rule out a further year of contraction between 2.5-3.0% for 2011, before hitting the bottom.
The main risk factor is the rising price of naphtha feedstock, compounded by imported price pressures which will be passed down the supply chain. BMI believes that margins are too low to absorb these cost pressures and they will inevitably be passed onto the consumer, with the prospect of slower sales growth. Should inflationary pressures continue to build, we would warn that this would risk the recovery.
Companies Mentioned:
- BP
- ExxonMobil Chemical
- Ineos
- Shell Chemicals UK
For more information visit http://www.researchandmarkets.com/research/4c9a00/united_kingdom_pet