A view on Chemicals at Austria

How has the chemicals sector performed in the last six months?

2009 was an exceptionally bad year for the Austrian chemical industry which, with a relatively small domestic market, is heavily export dependent. According to Bank Austria, production in this sector decreased 11% and turnover dropped 17%. However, unlike many subsectors such as plastics, coating and agrochemicals, which all suffered from substantial declines, pharmaceuticals recorded a slight increase in turnover. The response of many companies in the sector to falling demand was to take harsh cost cutting measures, including factory closures and downsizing their workforce.

There have been signs of a recovery in 2010, as international demand increases, with production rebounding 5% throughout the whole industry between January and May. However, volatile price development and a continuing rise in unemployment [up 1.4% in the first half of 2010] reflect the persisting uncertainty in the market. The plastics sub-sector at least has rebounded quickly, with a sharp increase in product prices since the end of 2009, as producers and processing industries restock their inventories.

What is the current trend in payment delays and insolvencies?

Insolvencies in the chemicals/pharmaceuticals sector decreased 17.1% in Q1 of 2010, following the 50% year-on-year increase in 2009.

What is Crédito y Caucións short term outlook for the chemicals sector?

For the rest of 2010, production will continue to grow, rising at least 6% by the end of the year. But it will take until 2012 to compensate for the loss in revenues suffered in 2009, as the recovery of the Austrian chemical industry depends largely on government stimulus packages and global inventory restocking both of which have short-term effects. In addition, the expected start of new chemical production in the Middle East next year and decreasing prices could adversely affect the industry.