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Global chemical industry: Coface gives its outlook

French credit insurer Coface released an outlook on the global chemical industry, in three segments: petrochemicals, specialty chemicals and fertilizers.

While petrochemical activities are more sensitive to changes in economic conditions, the specialty chemicals industry is less vulnerable to changes in economic cycles.

In contrast, activities related to the fertilizer industry are more subject to the ups and downs of the agri-food sector.

By 2023, Coface forecasts that petrochemicals will continue to be affected by the war between Russia and Ukraine.

A «scissors effect» is affecting industrial margins: on the one hand, with a fall in demand due to the slowdown in the world economy and in the global construction and automotive sectors; on the other hand, with high fossil fuel prices.

From Coface’s perspective, there are major risks for the sector in the short term, mainly the effects of high energy costs.

Medium-term uncertainties are also increasing (gloomy global economic activity with a risk of recession, possible relocations to regions where energy is less expensive), although production capacity will continue to grow in the coming years, particularly in Asia, the Middle East and North America.

Finally, Coface added, the proliferation of public policies aimed at carbon neutrality (Net Zero) around the world will encourage companies in the global chemical sector to reduce their environmental footprint in order to obtain better access to financing, as well as to avoid the growing risks of litigation, due to increasing pressure from environmental activists.

Health risks such as endocrine disruption and accidental pollution affect public perception of companies’ social contribution.

Global chemical industry

Flowserve Corporation believes that the outlook for the chemical industry remains highly dependent on global economic conditions.

As global economies and unemployment conditions improve, there should be an increase in consumer spending.

Increased spending would drive greater demand for petrochemicals, specialty chemicals and pharmaceuticals, supporting improved levels of capital investment.

Flowserve Corporation is a leading global manufacturer and aftermarket service provider of comprehensive flow control systems.

Overall, the company develops and manufactures precision-engineered equipment for the control and protection of material flow in its customers’ critical processes.

Its product portfolio of pumps, valves, seals, automation and aftermarket services supports global infrastructure industries, including oil and gas, chemicals, power generation (including nuclear, fossil and renewable) and water management, as well as selected general industrial markets where its products and services add value.

 

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