81% of chemical executives anticipate parts of chemicals industry value chain will move outside of Europe, according to survey
October 2023 - Chemicals
81% of chemical executives anticipate parts of chemicals industry value chain will move outside of Europe: A survey of 66 senior chemical executives by Deloitte has found that 81% of respondents anticipate parts of the industry value chain to relocate outside of Europe due to factors such as high energy prices, strict ESG requirements, favourable conditions elsewhere, and geopolitical developments. Additionally, 68% expressed concerns about an increasing risk of demand destruction within the European chemical sector.
The European Chemicals Pulse Check survey polled senior executives in the European chemical industry and sector associations representing various branches of the sector, including base chemicals, specialty chemicals, and plastics & materials. Its purpose was to understand more about their views, challenges within the sector and potential opportunities.
It found that opinions are divided among survey participants around the impact of EU regulations, with 63% fearing that regulations such as the EU Emissions Trading Scheme and the EU Carbon Border Adjustment Mechanism may jeopardise the export capabilities of sector companies. However, 70% recognise an opportunity to drive investments and innovations in sustainability and new business models through these regulations.
Given the prevailing geopolitical tensions, European chemicals manufacturers are reevaluating their investment strategies as a whole, found the survey.
The survey also indicated a notable shift in investments towards the USA, with 58% of respondents reporting this trend and 71% considering following suit. The prevailing expectation is that the USA will maintain its cost advantage in energy and raw materials over Europe until at least 2030. Conversely, respondents display more scepticism towards China, with 51% reassessing their future investments in the country. Furthermore, 71% express a desire to manage their digital and physical assets in China more independently from the rest of their global business.
Around two-fifths of the respondents polled (41%) work for companies with a revenue of over €10 billion, while 30% represent companies with a revenue between €2 billion and €10 billion.
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