Eurozone petrochemical recovery hamstrung by second wave concerns

Oxford Economics analysts have said the recovery of the Eurozone petrochemical industry, which according to Eurostat data showed a 1% output rise across all EU members in July 2020, could be hit by rising fears of a second wave of Covid-19 infections. They said an 8% reduction in output during Q2 lockdowns had not been compensated for by the slight recovery, which was showing “early signs of fatigue”. Their report also said output rose in all EU countries except France.

LONDON (ICIS)–Chemicals output in the eurozone rose slightly more than 1% in July, month on month, a lower increase than average industrial production levels, the EU’s statistical office Eurostat said on Monday.

In the wider 27-country EU, chemicals output also rose slightly more than 1%.

These modest increases compared with more than 4% increase in industrial production in both the EU and the eurozone.

However, the increase was not enough yet to compensate for falls in output during the second quarter amid lockdowns.

Analysts at Oxford Economics said the recovery was showing “early signs of fatigue” as rising coronavirus infections across Europe were denting confidence.

“Eurozone industrial output has recouped a large portion of its losses since the April trough but still remains almost 8% below the pre-pandemic levels,” said the analysts.

CHEMICALS RECOVERY SLOWS

Among all major producing countries, chemicals output in July rose in all but France; the increases in July were much lower than in June.

Eurostat did not provide year-on-year data for chemicals output across the eurozone or the EU

Chemicals output (% change) July June May April March EU 1.3 2.6 -0.1 -7.6 -3.6 Eurozone 1.1 2.7 -0.4 -7.4 -4.0 Germany 3.5 2.3 -6.0 -6.9 -3.1 France -1.0 4.3 11.2 -12.6 -12.9 Italy 2.9 1.9 8.1 -11.9 -5.6 Spain 4.3 7.2 3.1 -13.2 -0.7 Poland 4.8 4.8 5.3 -13.7 -1.4

Despite the increase in average Industrial production in July, output was still 7.7% lower than a year ago in the 19-country eurozone, and 7.3% lower in the EU as a whole, said Eurostat.

INDUSTRY SLOWS AS PANDEMIC EXPANDS

Eurozone analysts at Oxford Economics said the recovery has taken a turn for the worse due to rising infection rates in most major countries.

“The pace of recovery has declined, consistent with our view that the ‘easy wins’ of the mechanical rebound are close to being exhausted, while headwinds in the form of weak demand, limited capacity utilisation and disrupted supply chains continue to weigh on the sector,” said the analysts.

“The high-frequency indicators in our Recovery Tracker point to the recovery in activity stalling in recent weeks amid the resurgence in Covid-19 infections, which is also set to weigh on the industrial recovery.”

–

Front page picture: A woman gets tested for Covid-19 in Prague; rising infection rates across Europe could dent industrial activity

Picture source: Petr David Josek/AP/Shutterstock