Factors that bring instability to chemical companies

Some major European chemical companies, including BASF, saw sales fall at the end of 2018 and are not expected to recover soon.But the most unpredictable factor is the chaos and trade turmoil that would result from Brexit, which could be extremely volatile for chemical companies.

Hans Van Bylen, president of VCI, Germany's main chemical industry association, says that barring a major setback, the German chemical and pharmaceutical industry is Europe's largest market, with output expected to grow by 1.5 per cent in 2019."Chemicals should go up 1 per cent," he said.In that case, the industry's sales could be up 2.5 per cent.We believe that the chemical business is likely to grow moderately in 2019."

But the destabilising factor is Brexit.It is not clear whether The British parliament will accept the eu's restrictive terms of leaving, or whether the UK will reject the EU's deal, as is rumoured.A British exit without an agreement with the EU would inevitably prevent British companies from trading freely with EU companies.Establishing a new UK-EU trade agreement could take months, a time lag that could have a major impact on European trade in chemicals.

Tom Crotty, a board member of petrochemical producer Ineos, told a recent Meeting of the British Chemical Industry Association in London: "If that happened, it would be very disruptive to our business.Eu countries could also be hit hard.The Association of German Chambers of Commerce and Industry estimates that 750,000 jobs in Germany are at risk.

In addition to Brexit, European chemical companies will also face the impact of economic instability in Germany and Italy in 2019.Italian politicians have been hammering the EU's approach.Some political analysts say Italy may follow Britain's lead.

As for the local chemical trade that will suffer as a result of Brexit, here's a list from the Chemical Industry Association:

The UK chemical and pharmaceutical sector exports $60bn a year, 60 per cent of which goes to the EU.

About 75 per cent of UK imports come from the EU.

British chemical manufacturers have lobbied the British government to accept the terms of the EU's exit from the EU, creating a two-year transition period.

A no-deal Brexit could disrupt cross-border trade for months.

An estimated 80% of small businesses would be unprepared in the event of a no-deal Brexit.

The European Parliament is likely to adopt stricter environmental policies after the UK leaves the EU.

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