Growth prospects in the chemical industry

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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
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Scope of analysis chemical products (NACE 24)
and refined petroleum products (NACE 232)
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Pharma goes twice as fast as basic inorganics
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Hungary is still on the fast-growth track in car
penetration trend is expected to flatten
post-2015
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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
H
357
137
SLO
RO
10
6
HR
40
BIH
410
SCG
km
5
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Weight of export sales increased dramatically in
the last 25 years in EU15, as the industry
globalized
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Proportion of supply from non-EU countries have
been doubled in 15 years
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EU25 demand falls behind the growth rate of
output, resulting in mounting export pressure,
and increasing competition
Surplus (EUR bn)
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Investors already decided to cut back the rate of
chemical investment in EU25
Gap (EUR bn)
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and the industry is loosing is labor force
rapidly, leaving little room for recovery
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New accession (EU10) countries are no exceptions
to the wider European trend of increasing weight
of imported chemicals
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however, the region is still net importer of
chemical products (as opposed to EU25), although
the trend is flattening
Gap (EUR bn)
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Labor force is decreasing, but this may just be
the result of efficiency improvement
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since investment is keeping up with overall GDP
growth trend
Gap (EUR bn)
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and the overall productivity (turnover per
employee) inceased faster than in the EU15 or in
the USA
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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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