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Growth prospects in
the chemical industry
Growth in Hungary: status and prospects
ICEG EC – MKT Conference – 9 December, 2005.
János Mátyás
Head of Strategy & Portfolio Governance
Scope of analysis: chemical products (NACE 24)
and refined petroleum products (NACE 232)
23 Manufacture of coke, refined petroleum products and nuclear fuel
231 Manufacture of coke oven products
232 Manufacture of refined petroleum products
233 Processing of nuclear fuel
24 Manufacture of chemicals and chemical products
241 Manufacture of basic chemicals
242 Manufacture of pesticides and other agro-chemical products
243 Manufacture of paints, varnishes and similar coatings, printing ink and mastics
244 Manufacture of pharmaceuticals, medicinal chemicals and botanical products
245 Manufacture of soap and detergents
246 Manufacture of other chemical products
247 Manufacture of man-made fibres
25 Manufacture of rubber and plastic products
251 Manufacture of rubber products
252 Manufacture of plastic products
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Pharma goes twice as fast as basic inorganics
Annual growth rate (%)
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
Pharma
Petrochemicals
Plastics and rubber
Consumer chemicals
Specialty and fine
chemicals
Basic inorganics
2004
2005
3
Hungary is still on the fast-growth track in car penetration: trend is expected to
flatten post-2015
Theoretical car penetration curve and countries in 2002
Number of Motor Vehicles (per 1000 people)
900
800
USA
700
Italy
600
Canada
Austria
Spain
500
400
Croatia
300
Hungary
Slovakia
200
100
Turkey
China
0
0
5
10
15
20
25
30
35
40
GDP/capita (1000 PPP$)
4
Landlocked refining is a local business
Number of MOL Group filling stations
Number of INA filling stations
PL
D
31
UKR
CZ
261
SK
23
A
10
H
357
137
SLO
RO
6
HR
410
BIH
40
SCG
0
500
1000 km
5
Weight of export sales increased dramatically in the last 25 years in EU15,
as the industry globalized
Chemical sales (EUR bn)
500
450
400
350
300
250
200
150
100
50
0
1990
1991
Domestic
1992 1993
1994
1995
1996
1997 1998
1999
2000
2001
2002 2003
2004
Import
6
Proportion of supply from non-EU countries have been doubled in 15 years
Origin of supply
100%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
EU25
Non-EU
7
EU25 demand falls behind the growth rate of output, resulting in
mounting export pressure, and increasing competition
Growth rate (%)
Relative growth (1990=100)
Surplus (EUR bn)
18
180
100
16
170
90
14
160
80
12
150
70
10
140
60
8
130
50
6
120
40
4
110
30
2
100
20
0
90
10
-2
80
0
1990 1992 1994 1996 1998 2000 2002 2004
EU25 cons
EU25 outp
1990 1992 1994 1996 1998 2000 2002 2004
Surplus
EU25 cons
EU25 outp
8
Investors already decided to cut back the rate of chemical investment in EU25 …
Gap (EUR bn)
Relative growth (1990=100)
160
140
120
100
80
60
40
20
0
1996
1997
1998
1999
Capital spending in chemicals
2000
2001
2002
2003
2004
EU25 GDP per capita
9
… and the industry is loosing is labor force rapidly, leaving little room for recovery
Relative growth (1990=100)
110
105
100
95
90
85
80
1996
1997
1998
1999
2000
2001
2002
2003
2004
EU25 population
Chemical industry employment
Chemical industry employment excluding pharma
10
New accession (EU10) countries are no exceptions to the wider European trend of
increasing weight of imported chemicals …
Chemical sales (EUR bn)
80
70
60
50
40
30
20
10
0
1994
1995
Domestic
1996
1997
1998
1999
2000
2001
2002
2003
2004
Import
11
… however, the region is still net importer of chemical products (as opposed to
EU25), although the trend is flattening
Gap (EUR bn)
Relative growth (1990=100)
260
16
240
14
220
12
200
10
180
8
160
6
140
4
120
2
100
0
1994
Gap
1995
1996
EU10 cons
1997
1998
1999
2000
2001
2002
2003
2004
EU10 outp
12
Labor force is decreasing, but this may just be the result of efficiency
improvement …
Relative growth (1996=100)
110
105
100
95
90
85
80
75
70
65
60
1996
1997
1998
1999
2000
2001
2002
2003
2004
EU25 population
Chemical industry employment
Chemical industry employment excluding pharma
13
… since investment is keeping up with overall GDP growth trend …
Gap (EUR bn)
Relative growth (1990=100)
200
180
160
140
120
100
80
60
40
20
0
1996
1997
1998
1999
Capital spending in chemicals
2000
2001
2002
2003
2004
EU10 GDP per capita
14
… and the overall productivity (turnover per employee)
inceased faster than in the EU15 or in the USA
Productivity index (1990=100)
600
500
400
300
200
100
0
1990
1991
1992
USA
1993
1994
1995
1996
1997
EU15
1998
1999
2000
2001
2002
2003
2004
EU10
15
Conclusions
► Petroleum refining
 Sufficient mid-term (5-10 years) organic growth, largely fulfilled by local
production or regional import
► Chemical industry
 European trends are rather discouraging
•
•
•
•
•
Increased extra-EU import
Falling investment
Deteriorating labor force
Export pressure mounting
Pharma may keep its position mid-term
 Regional industry is in a slightly better shape
• Net importer position, butvalue of import seems to flatten
• Investment keeps up with GDP growth
• Labor force decreases, but probably for efficiency improvement reasons
Medium-term future is safe, but the sky is cloudy:
the industry needs to find solutions
to avoid repeating the story of WE chemical industry
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